Preamble

The House met at half-past Two o' clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — DEFENCE

Piracy

Sir John Biggs-Davison: asked the Secretary of State for Defence whether, since his answer of 3 March, Official Report,  c. 155, Her Majesty's ships and aircraft have been involved in operations to suppress piracy, and, in particular, that committed against boat people in the Gulf of Thailand and elsewhere.

The Under-Secretary of State for the Armed Forces (Mr. Jerry Wiggin): My right hon. Friend the Secretary of State conveys his apologies to you, Mr. Speaker, and to the House for not being here today. He is attending a NATO ministerial meeting in the United States. The answer to my hon. Friend is "No, Sir".

Sir John Biggs-Davison: Does it not accord with our tradition and duty as a maritime power to take part with the forces of Commonwealth, allied and other maritime powers in the prevention of mass murder on the high seas, about which the Red Cross has given horrifying reports?

Mr. Wiggin: All signatories of the Geneva convention are pledged to co-operate to the fullest possible extent in the repression of piracy. My hon. Friend will be glad to know that, subject to parliamentary approval, we have recently pledged £110, 000 following an appeal from the United Nations High Commissioner for Refugees.

Naval Ships (Orders)

Mr. R. C. Mitchell: asked the Secretary of State for Defence whether he will list the new orders for naval ships that he expects to place with British shipyards during the financial year 1982–83.

The Under-Secretary of State for Defence Procurement (Mr. Geoffrey Pattie): Orders will be announced as they are placed following the satisfactory conclusion of contract negotiations with the shipbuilders. However, we are currently initiating tender action for a mine countermeasures vessel, a nuclear-powered fleet submarine and the first batch of a new class of fleet mine sweepers with a view to placing orders in the coming year.

Mr. Mitchell: Is the Minister aware that cuts in naval shipbuilding are already causing many redundancies at Vosper Thornycroft in Southampton? Is he further aware that this, combined with the proposed closure of

Portsmouth dockyard and the cuts in naval training establishments that are to be announced today, will have very damaging effects on employment prospects in Southern Hampshire? Is this not a very high price to pay for Trident?

Mr. Pattie: I do not accept the hon. Gentleman's contention that this is part of the price, as he describes it, of Trident. His points are, of course, legitimate and important constituency aspects concerning Vosper Thornycroft. As I have told him from this Box, we are continuing and even re-doubling our efforts to give what support we can to Vosper Thornycroft in its efforts to obtain export orders that we think will be highly beneficial to that company.

Mr. Viggers: Can the Minister announce results of the review of training and shore establishments supporting the fleet?

Mr. Pattie: Stemming from the changes outlined last June in Cmnd. 8288, my hon. Friend the Minister of State for the Armed Forces is announcing today, in answer to a written question, that we propose, subject to the normal consultation procedures, to close certain naval shore training establishments in the year up to and including 1986, as follows. In the Portsmouth area, HMS "Phoenix", HMS "Excellent, " HMS "Vernon", the Fraser gunnery range and, at Torpoint, HMS "Fisgard". Hon. Members whose constituencies are affected are being kept informed, as are Naval personnel, and a copy of a message to the Fleet setting out these proposals in detail has been placed in the Library.

Mr. Denzil Davies: Before the Government dismantle the Royal Navy even further—another 4, 000 job losses were announced on the tape today, and the Minister should have had the courage to come to the House to make a statement as it affects so many jobs and the Royal Navy—should not the Government rethink their naval strategy? As I understand it, their whole defence strategy is based on the fact that if there is a war in Europe it will last for only a few days. Does it not make much more sense to assume that that war, should it occur, would be a war of attrition and that the Royal Navy would have to play a very important part, especially in the Eastern Atlantic?

Mr. Pattie: If that is the right hon. Gentleman's understanding of defence strategy, he ought to read again Cmnd. 8288. Questions of courage do not arise, because the decisions announced today are simply pursuant to the policies outlined in last July's White Paper.

Sir David Price: Returning to the question on the Order Paper, when will my hon. Friend's Department expedite orders for the type 23 frigate? My hon. Friend will recall that that was promised to us when we were told that we would no longer have re-fits of the old-type frigates.

Mr. Pattie: As I am sure my hon. Friend will agree, it would be wrong to rush ahead with the type 23 frigate. We are now actively pursuing its design and trying to agree on the exact configuration of the ship. Like my hon. Friend, we want to get ahead with all dispatch, but it would be wrong to do so until the design is finally agreed, and that is what we are waiting on now.

Mr. Alan Clark: On a point of order, Mr. Speaker. We have just been told that a subject that affects defence is to


be revealed in a written answer. As the Minister mentioned that fact, will you allow questions on the subject, because it appears that his assurance that hon. Members whose constituencies are affected will be kept informed—we all know that that means that there will be a written statement of his intentions—does not allow us the kind of freedom to question on behalf of our constituents that we should prefer?

Mr. Douglas: On a point of order, Mr. Speaker.

Mr. Speaker: Order. Is the hon. Gentleman's point further to the point of order? This is Question Time.

Mr. Douglas: Further to that point of order, Mr. Speaker. I shall delay putting my point of order, if it would be more suitable to do so later. I have given you notice that I wish to raise this point of order.

Mr. Speaker: I must try to guard Question Time for other hon. Members who have questions on the Order Paper. I shall take a point of order on that matter at the end of Question Time.

Dr. John Cunningham: Does the Minister recognise that the decision to axe naval vessels and put off orders for conventional vessels for the Navy has blown a massive hole in British Shipbuilders' corporate plan, and that it will cause thousands of redundancies in naval yards on the Tyne, the Clyde, and elsewhere? Does that not make nonsense of what he has just said about jobs not being threatened by what his Department does?

Mr. Pattie: I cannot imagine that what the hon. Gentleman has just said follows from the answer that I gave earlier. I said that certain shore establishments have been closed—

Dr. Cunningham: Question No. 2.

Mr. Pattie: In answer to the original question, which related to new orders that had been placed, I enumerated those orders, and they are quite considerable.

Adventure Training Scheme

Mr. Stanbrook: asked the Secretary of State for Defence when he expects to be in a position to assess the results of the adventure training scheme; and, in particular, whether any increase in its scope may be needed.

Mr. Wiggin: Applications for places on the scheme will be accepted from 29 March, and the first courses will begin shortly after Easter. I shall be keeping the scheme under review as it progresses through the summer. It will not be possible to increase its scope beyond the 7, 000 places already announced.

Mr. Stanbrook: Is my hon. Friend aware that this excellent scheme, if properly handled, will be very popular among young people? Will he ensure that adequate resources will always be available for it? If the demand proves sufficient, will he expand it?

Mr. Wiggin: As I said, I do not think that we can expand it this year, because the scheme is designed to mop up spare capacity of our training machine. For the same reason, I cannot give any assurances about the future beyond this 12-month period.

Mr. Canavan: What is the point in spending about £1½ million for the MOD to provide adventure courses for young people when Government economic policy is

forcing local authorities to close down their adventure centres, and the Outward Bound Trust cannot even fill all the vacant places at its centres, like the Lochiel centre in Scotland? Is it not a bit thick that the Fuhrer of this new youth army is to be none other than the mad-cap toy soldier, the well-known Lieutenant-Colonel John Blashford-Snell, who seems to have spent much of his Army service on paid tours all over the world on exploits that are of questionable value to young people, especially unemployed and under-privileged young people who should get priority in any Government-sponsored training schemes?

Mr. Wiggin: Colonel Blashford-Snell has done a remarkably good job in conveying many of the virtues and disciplines of the Armed Forces to many under-privileged young people over many years. I hope that the opportunity that we are giving him now to repeat that will be welcomed. This is a charitable gesture, to deal with a short-term problem in a way that I believe will be of great benefit to about 7, 000 young people.

Mr. Maxwell-Hyslop: Will my hon. Friend look at the way the scheme is being run, because it seems as though priority is being given to public school cadet forces, rather than to the deprived boys for whom the House understood that the scheme was introduced? Is that not a deviation from what was announced as the original intention?

Mr. Wiggin: My hon. Friend is right on a point of detail, in that the original statement said that cadet forces would be given priority. However, I have given instructions that the combined cadet force, which already has similar training, camps and other facilities, shall not be given priority. Priority will be given to the Army cadet force, the air cadets and the Navy cadets. I hope that I have put the matter straight.

Mr. McNamara: Will the Minister tell us what priority he will give to children or young people from under-privileged backgrounds in city centres? Will he give an undertaking that they will be put to no expense, nor be expected to meet any charges for equipment, uniforms, running shoes, football boots, games equipment, and such items?

Mr. Wiggin: We have said that the scheme will be free and that we shall provide travel, food and clothing that is suitable for training. I have kept a close eye on maintaining a balance. It is a difficult subject. For example, if we took young people only from under-privileged areas, the scheme would not be as useful as a more balanced scheme. There will be central control, with the idea of trying to get a reasonable balance between the under-privileged and better-off areas of the country.

Trident

Mr. Meacher: asked the Secretary of State for Defence what is the latest estimated total cost of Trident at current prices, taking account of all modifications adopted since the original announcement and of the effect of inflation since that date.

Mr. Ioan Evans: asked the Secretary of State for Defence whether a decision has yet been reached on the Trident programme; and if he will make a statement.

Mr. Latham: asked the Secretary of State for Defence whether he has now completed his consideration of the future configuration of the United Kingdom's strategic nuclear deterrent.

Mr. Cryer: asked the Secretary of State for Defence if he is yet in a position to say whether he intends to buy the C4 or D5 version of the Trident missile.

The Minister of State for the Armed Forces (Mr. Peter Blaker): I refer the hon. Members to the statement made by my right hon. Friend the Secretary of State for Defence on 11 March.

Mr. Meacher: Is it not true that a cost escalation of 50 per cent. during the last two years is well on target for the enormous over-shoot that is so typical of defence projects? Is it not true that, in time, Trident will require new warheads and new motors on its missiles, as in the case of Polaris? Is it not the case that the costs of those items—probably £2 billion to £3 billion—are not yet included? Is not Trident, in any case, thoroughly bad value for money, because even a marginal impact on total defence costs will sooner or later lead to significant reductions in conventional defence capability, which is our real weakness?

Mr. Blaker: The hon. Gentleman is wrong. He will recall that Polaris came in on cost, and there are good reasons to hope that the same thing will happen with Trident. The Americans have considerable experience in the development of missiles. We are to get a fourth generation missile from the Americans. The previous missiles came in on time and on cost. We have considerable experience in the construction of submarines. Our SSN programme has shown very little cost escalation in real terms, so I do not think that the hon. Gentleman's fears have any basis.

Mr. Evans: As the world already possesses 50, 000 nuclear weapons with a destructive capacity of 1 million Hiroshima bombs—something that should be understood by everyone in the country—are the Government right in spending about £8 billion to £10 billion on Trident, money that will come from future Naval Estimates? Is that not why the written answer that is to be made later today talks about a cutback in naval conventional weapons?

Mr. Blaker: The announcement that is to be made later today has nothing to do with Trident.

Mr. Hoyle: Absolute rubbish.

Mr. Blaker: The defence review last year dealt with the problems at that time, when Trident was costing practically nothing. In the Naval Estimates we budget for defence purposes. We have a separate programme for Trident. It makes sense that the Navy should manage that programme, because the Navy will man Trident. It does not follow that if we did not have Trident the naval programme would be any different.

Mr. Latham: Is it not clear that Trident is by far the most effective strategic deterrent and that, so long as these abominable and dreadful weapons exist, the United Kingdom Government alone are ultimately responsible for the defence of these islands and cannot shuffle off the responsibility to anyone else?

Mr. Blaker: I entirely agree with my hon. Friend. The Opposition's policy of abandoning our strategic nuclear deterrent would not enhance the prospect of peace. Rather, it would diminish that prospect.

Mr. Cryer: Is is not hypocritical for the Government to talk about peace and disarmament when, by buying the D5 Trident missile, they are fuelling a new nuclear arms race? That missile is at least 15 to 30 times more powerful than the Polaris missile that it replaces. Why is Trident so much more accurate and why is greater accuracy necessary unless there has been a change of policy from mutually assured destruction to targeting the missiles against military targets with a view to using them as first-strike weapons?

Mr. Blaker: The power of our Trident force will bear roughly the same relationship to the Soviet Union's strategic nuclear deterrent, when it is introduced, as Polaris bore towards the Soviet Union's strategic nuclear forces when it was introduced. It is certainly not NATO's policy to go for a first strike, as the hon. Gentleman implied. Still less is it the Government's policy to go for a first strike. It would not make sense and would be impossible. We have chosen Trident for reasons of commonality with the United States. Trident is simply the most cost-effective successor to Polaris that is available.

Mr. Banks: Is it not the case that the present estimates for the Trident programme include a figure for on-going research? Does my hon. Friend agree that that could be a factor in escalating the final cost outcome?

Mr. Blaker: With respect, that is not accurate. We have a fixed figure for the cost of research and development. That is one of the most important aspects of the agreement achieved by my right hon. Friend the Secretary of State.

Dr. McDonald: Will the Minister confirm that the Trident programme involves spending £3 billion to £5 billion at dollar prices in the United States and thus squandering money that would be better spent on providing properly independent conventional forces in Britain? Will the hon. Gentleman bear in mind that, as the policy involves a minimal nuclear deterrent for the United Kingdom until the mid-1990s, it puts us in hock to American economic and foreign policies and makes us wholly dependent upon the United States for the next 15 years?

Mr. Blaker: If we buy Trident from the United States there is no reason why we should be in hock to that country's foreign policies. [Interruption.] We have not been in hock before and there is no reason why we should be. The world scene shows that the purchase of weapons from another country does not put the purchaser in hock to the seller. It would not put us in hock any more than it would put another country in hock. The other day my right hon. Friend the Secretary of State made it clear that 45 per cent. of the cost of Trident will be spent in America. The figure for the C4 would have been higher than expected, largely due to the cost in exchange rates. However, the Americans are buying much more from us. Between £1 billion and £1·5 billion worth of contracts have been concluded recently by the Americans. The ratio between American and British purchases is much more favourable than it was a few years ago.

Mr. Cryer: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I give notice that I intend to raise the matter on the Adjournment.

Nuclear Weapons Policy

Mr. Greenway: asked the Secretary of State for Defence what measures his Department has taken to ensure that Her Majesty's Government's policy on nuclear weapons is made clear to the general public.

Mr. Blaker: Defence policy, including the need for nuclear weapons, is set out in the annual statement on the Defence Estimates and in open Government documents such as that recently produced on Trident. A range of fact sheets and pamphlets on deterrence and disarmament subjects is also published by the Ministry of Defence and the Foreign and Commonwealth Office. In addition, the Central Office of Information has recently produced, and is now distributing on request, an audio-visual film called "A Better Road to Peace", setting out the reasons for our policies on deterrence and multilateral disarmament.

Mr. Greenway: Although I welcome the fact that the Ministry is issuing leaflets giving the facts about nuclear deterrence and multilateral disarmament, will my hon. Friend give an assurance that they will include the important moral arguments involved? Will my hon. Friend bear in mind that the United Kingdom has drastically cut its contribution to the NATO information budget, which will affect the information services on this subject in Britain, and will he do something about it?

Mr. Blaker: The main purpose of those publications is to give the facts about deterrence and multilateral disarmament. That is necessary because of some of the mis-statements of fact that have emanated from the unilateralist organisations. The publications cover the facts and the arguments, including the moral arguments. The NATO information services are a matter for my right hon. and noble Friend the Foreign Secretary, and I shall draw his attention to that point.

Mr. James Lamond: Will the Government's propaganda effort include the statement in the Government's White Paper that there is no evidence of any sort to show that the Warsaw Pact has aggressive intentions towards Western Europe? [Interruption.] Will the hon. Gentleman make it clear that between NATO and France, the West has 7, 000 nuclear warheads designed for use in Europe, while the Soviet Union has 4, 000?

Mr. Blaker: I cannot accept the hon. Gentleman's figures. He has described the Government's information effort as "propaganda". I do not know how he would describe a document that I have in front of me. It is a full-page advertisement from The Times,  which was put out in 1969 by the Labour Government and which supports Britain's acquisition of Polaris.

Mr. Buck: Will my hon. Friend confirm that the fundamental considerations of the Government's policy are precisely the same as those that caused the Labour Government to upgrade our Polaris deterrent by the introduction of Chevaline?

Mr. Blaker: I entirely agree with my hon. and learned Friend. It is curious that when it is in Opposition the Labour Party adopts one attitude towards such matters, and when it is in Government it appears to adopt another.

Mr. John Silkin: Is the hon. Gentleman aware that the right hon. Member for Sidcup (Mr. Heath) inaugurated Chevaline? However, that is just by the way. Is the Minister also aware that the Opposition welcome a public debate on Trident, and that we started that debate and are winning it? Is he aware that he and his right hon. and hon. Friends will have to do much better than the fact sheets that the Ministry of Defence has put forward at the Hillhead by-election?

Mr. Blaker: It is accurate to say that when the Labour Party was in power, it endorsed Chevaline.

Mr. John Silkin: The hon. and learned Gentleman said "introduced".

Mr. Blaker: I do not think that I used the word "introduced". I said "endorsed". The Labour Party's policy—as expounded by the Leader of the Opposition—is that if a Government led by him were to disarm unilaterally, other countries would follow us. That is a little ironic, since the right hon. Gentleman seems to find it difficult to set an example to his party.

Mr. John Silkin: May I correct the hon. Getleman? In the first place, the word used was "introduced", not "endorsed". Secondly, my right hon. Friend the Leader of the Opposition has spoken about unilateral nuclear disarmament, but never about disarmament as such.

Mr. Blaker: I accept the right hon. Gentleman's latter point.

Defence Equipment (European Co-operation)

Sir Anthony Meyer: asked the Secretary of State for Defence if he will consider the implications of the speech made in London on 9 February by the French Minister of Defence, M. Georges Lemoine; and if he will take action in consequence to promote European co-operation in the production of defence equipment, particularly aeronautical equipment.

Mr. Pattie: We have a long and successful record of promoting European co-operation in the production of defence equipment—Jaguar and Tornado are two important examples—and we shall continue to look for new collaborative opportunities. I therefore found M. Lemoine's speech of interest.

Sir Anthony Meyer: Does my hon. Friend accept that his verdict is not the generally accepted verdict, which is that there is scope for much more joint production of European weapons to provide jobs throughout European defence industries? Will my hon. Friend build on the French Government's declared increased readiness to cooperate much more in order to establish more joint production?

Mr. Pattie: I agree that there are opportunities, but there are also difficult political questions that must be resolved. The French Government would accept that they would be among the first to raise those questions if rationalisation were called for.

Mr. Hooley: Will the Under-Secretary confirm that defence procurement has nothing to do with the Treaty of Rome, and that our membership of the Common Market has no implications for our defence position?

Mr. Pattie: Yes, Sir.

Mr. Robert Atkins: Does my hon. Friend agree that, in view of the offer made by French aviation interests to German aviation interests that there should be cooperation on the production of an aeroplane similar to the P110, the need for co-operation by the Ministry of Defence with the Germans, to the detriment of the French, should be a matter of some urgency?

Mr. Pattie: As my hon. Friend knows from our frequent exchanges on the subject, we are in close contact with the German Ministry of Defence, and indeed the French Ministry of Defence, on the matter, and those consultations will continue.

P110 Aircraft

Mr. Edwin Wainwright: asked the Secretary of State for Defence when he expects that the studies on the next generation of combat aircraft referred to on 1 March, Official Report,  column 134, will be completed; and if he will make a statement.

Mr. Pattie: As I said during the debate to which the hon. Gentleman referred, our studies are still at an early stage. We shall need to weigh the issues very carefully, and it is too early to predict when this process is likely to be completed.

Mr. Wainwright: Are the Government quite satisfied about the quality and the capabilities of the P110, and, if so, does the Under-Secretary of State not believe that it is now time that the Government made a definite decision? Is he further aware that we always wait too long and that our research and development are wasted because of that delay? Will the Government now make up their minds as quickly as possible?

Mr. Pattie: I accept that what the hon. Gentleman said has happened in the past—that successive Governments have tended to delay the implementation of such projects. However, the hon. Gentleman and the House should know that the Ministry of Defence and the Department of Industry must consider at least three major programmes this year—the A320 civil project, the RJ500 engine project and the P110. They must be considered at the same time and they will all cost a great deal of money.

British Army of the Rhine

Mr. Trotter: asked the Secretary of State for Defence whether he will list the steps that have been taken since May 1979 to increase the fighting strength of the Army in Germany.

Mr. Wiggin: Since May 1979 major steps taken include full manning, the testing and improvement of reinforcement and mobilisation arrangements, the start of a major reorganisation to improve the operational capability of 1(BR) Corps, and the deployment of a wide range of new equipment, with further re-equipment planned.

Mr. Trotter: Will my hon. Friend accept my congratulations on what has been achieved in the British Army of the Rhine? I understand that for the first time the reorganisation has emanated from BAOR instead of being enforced on it by London as an economy measure. Will there be adequate stores of spare parts, ammunition and fuel so that training can continue up to the high standard of our Army in Germany?

Mr. Wiggin: Yes, Sir.

Mr. Churchill: Does my hon. Friend agree that it is a strange commentary on the proposition put forward by the Defence spokesman for the Labour Party in that when it was in Government, contrary to its suggestion that it would favour a strong, conventional defence, 15 per cent. of the British Army of the Rhine's tanks were in mothballs because it did not provide the resources and manpower for them? Will my hon. Friend accept the warmest congratulations from Conservative Members on the fact that the Government have taken steps to rectify the position?

Mr. Wiggin: My hon. Friend scarcely puts a question to me, but he is correct to say that the number of tanks with crews has increased from 469 to 590 since the general election and an extra armoured regiment has been formed. I am grateful to him for his remarks.

Mr. McNamara: When were the plans for those improvements laid, because they were not laid within the time that the hon. Member for Stretford (Mr. Churchill) suggested? Does the BAOR have sufficient anti-tank capacity to meet what is coming from the Russians? Can the Minister say whether, because of the reductions in our naval and aircraft cover, we can transfer our reserve forces from the United Kingdom to Germany in sufficient time to meet any threat?

Mr. Wiggin: As the hon. Gentleman knows, Exercise Crusader demonstrated that our reinforcement capability is as we planned. That exercise was a great success. Our anti-armour capability has been enhanced with the deployment of Milan. Tow is now entering service with improved warheads planned, Challenger is to be introduced and there are programmes of improvement to Chieftain, as well as the issue of the new man portable Law 80 anti-tank weapon. In general, we are doing a good all-round job in anti-armour.

Chemical Weapons

Mr. Haynes: asked the Secretary of State for Defence, pursuant to his answer to the hon. Member for Newbury (Mr. McNair-Wilson) on 23 February, Official Report,  column 737, whether the United States Government have consulted him about the storage of chemical weapons in the United Kingdom.

Mr. Pattie: There is nothing that I can usefully add to the answer that my right hon. Friend gave to the hon. Member for Newbury (Mr. McNair-Wilson) on 23 February. The United States Government have not requested the storage of chemical weapons in the United Kingdom and we are not expecting any such request.

Mr. Haynes: Is the Minister aware that that answer is not acceptable and that many of us believe that the Government are hiding behind the Official Secrets Act on this matter? Will the Government come from behind that cloak of deceit and let Britain know exactly what is goring on with chemical weapons?

Mr. Pattie: The hon. Gentleman persists in his delusion about a cloak of deceit. I repeat that there have been no such requests, nor are we expecting one.

Mr. Alan Clark: Does my hon. Friend agree that if this country wishes to make, store or deploy chemical


weapons, that is a matter for the Government and for the House, possibly, to debate and discuss, but the fact that any other Power might wish to store them here is not of the slightest interest or relevance? Will he confirm that there is a clear qualitative distinction between any facilities and agreements that allow the United States of America to store nuclear weapons in this country and that these could not, under any circumstances, be invoked to cover an equivalent facility for chemical weapons?

Mr. Pattie: I certainly agree with the general thrust of my hon. Friend's remarks. It is the duty of any British Government to be aware of the changing nature of the threat and to be aware of the fact that the Soviet Union has 60, 000 troops specially trained and designated for chemical warfare, with huge quantities of chemical agents that they are deploying forward.

Mr. Denzil Davies: Why does not the Minister assure us that the British Government will not allow the stockpiling of American chemical weapons in Britain? Does he not agree that there has been enough proliferation of nuclear weapons in Europe already, without embarking upon further proliferation of chemical weapons?

Mr. Pattie: I have already answered the question that was originally put to me. In the unlikely event of the right hon. Gentleman being in my place, he would not answer such a hypothetical question.

Mr. Warren: Will my hon. Friend confirm that not only is the Soviet Army equipped with chemical weapons, but that they are a front-line capability of the Soviet troops in the Warsaw Pact facing our men in Central Europe?

Mr. Pattie: We know from observations of Soviet exercises that all of their exercises are conducted under nuclear, biological and chemical conditions. We are also aware that chemical weapons have been supplied to satellite countries of the Soviet Union and are used, as has been reported in today's newspapers, in different parts of the world, including Kampuchea.

South Atlantic (Maritime Air Surveillance)

Mr. Farr: asked the Secretary of State for Defence if he will take steps to ensure the efficiency of maritime air surveillance capability in the South Atlantic.

Mr. Wiggin: I am satisfied that our air surveillance capability is commensurate with our defence needs.

Mr. Farr: In view of the incident on Friday in the Falkland Islands when South Georgia was invaded by Argentinian people, and the possibility of further such incursions, will my hon. Friend consider the possibility of keeping HMS "Endurance" on station in the South Atlantic until such time as she can be replaced by a more modern and effective vessel?

Mr. Wiggin: I am in some difficulty, because my hon. Friend the Minister of State, Foreign and Commonwealth Office will be answering a private notice question on the subject in a moment, but I assure my hon. Friend that we take all those matters into account when deciding the disposition of Her Majesty's ships.

Mr. Jim Spicer: Does my hon. Friend agree that, given the vast sea areas that we are talking about, there is a definite need for land bases for maritime reconnaissance aircraft? Will he say where such bases might be established in time of need, if not in peace time?

Mr. Wiggin: The South Atlantic is outside the NATO area. In general terms, we have no need for regular surveillance and we have no intention of establishing it.

Sir John Biggs-Davison: As the Falkland Islands would make a good headquarters in a South Atlantic treaty organisation—which is sadly lacking—what are Her Majesty's Government doing to ensure the safety of that base in conformity with the first principle of war?

Mr. Wiggin: The security of the Falkland Islands remains a matter of concern to Her Majesty's Government, who maintain a garrison of Royal Marines there, as my hon. Friend knows. That garrison is currently supported by HMS "Endurance" and in future it will be supported by other ships of the Royal Navy.

Mr. Ogden: Is the Minister aware that it is no use referring to a forthcoming statement by a Minister from the Foreign and Commonwealth Office? The Ministry of Defence decided to abandon the continuation of HMS "Endurance" in those waters. It is the Ministry of Defence that is responsible for maritime defence and for safety and security—

Mr. Speaker: Order. The hon. Gentleman must ask a question.

Mr. Wiggin: I do not wish to pre-empt the statement by my hon. Friend the Minister of State. When hon. Members learn more about the nature of the threat, they will realise that that question is not relevant.

Mr. Farr: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

Expenditure

Mr. Dubs: asked the Secretary of State for Defence what is his present estimate of the increase in defence expenditure in real terms in 1980–81 compared with 1982–83; and how this compares with the planned increase for 1982–83.

Mr. Blaker: The precise level of real growth achieved will depend on final outturn. On the basis of the forecast of outturn published in Cmnd. 8494 there will be real growth in 1981–82 of about 1·5 per cent. over 1980–81. The cash provision for 1982–83 is in line with the NATO 3 per cent. real growth commitment.

Mr. Dubs: Will the Minister confirm that NATO's 3 per cent. growth figure is not based on any assessment of defence needs, but is simply the percentage that NATO thought it could get away with?

Mr. Blaker: The figure is based on the assessment of NATO that we need to increase our defences in the face of the increasing Armed Forces of the Soviet Union.

Mr. Neil Thorne: Will my hon. Friend say what percentage of the increase will be spent in this country rather than overseas, because I feel that that is a particularly important element of the figures?

Mr. Blaker: With regard to equipment purchases, which I think my hon. Friend may have in mind, we spend over 80 per cent. of our equipment budget in this country.

Mr. Frank Allaun: Is not that estimate a twist? Is not the real increase far greater, because the Minister, instead of taking into consideration the retail price index, as every


other Department does, has a special price index for arms, which grow more and more sophisticated and expensive every year? If the Minister had used that other method of estimation, in real terms the increase would have been £6½ billion more than it has been over the last 10 years.

Mr. Blaker: As the hon. Gentleman says, it is true that arms increase rapidly in cost. However, his basic premise is wrong.

Mr. Henderson: Does my hon. Friend agree that the purpose of all defence spending is to ensure peace? In view of that, is it not the case that on the one hand the Government have increased our conventional capability and on the other hand they have provided for the most cost-effective way of securing peace through the provision of Trident? Is my hon. Friend satisfied that the Government are doing enough to counter the immense threat of chemical weapons from the Soviet Union?

Mr. Blaker: We have already had a question about chemical weapons. Our forces are trained in measures to be taken against chemical weapons. With regard to the early part of my hon. Friend's question, it is true that, even after allowing for Trident, under our projections billions of pounds extra will be available because of the 3 per cent. increase in real terms in expenditure on conventional weapons.

Mr. John Silkin: To what extent has the Minister taken into account the fact that we allocate over 90 per cent. of our defence expenditure to NATO, unlike every other member of NATO? The result is that, even more than the United States and Germany, we are paymasters of NATO. Accordingly, with every item of defence expenditure that we take into account we should bear in mind that we are the highest spender in NATO.

Mr. Blaker: I am not sure that I follow the exact implications of the right hon. Gentleman's question. Our defence effort is made in concert with our NATO allies. We are observing the objective, which has been set down by agreement in NATO, of a constant annual increase in real terms of 3 per cent.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. William Hamilton: asked the Prime Minister if she will list her official engagements for 23 March.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall have further meetings later today. This afternoon I shall attend the opening by the Prime Minister of India of an exhibition at the Hayward gallery. This evening I hope to have an audience of Her Majesty the Queen. Later I shall attend a dinner given by the Indo-British Association.

Mr. Hamilton: Will the Prime Minister take time today to read the Treasury reply to my hon. Friend the Member for Blackburn (Mr. Straw) on the tax effects of the Budget on the average family? Will she confirm that successive Budgets have resulted in nine out of every 10 families in Britain paying substantially more taxes now than in 1979? Does not that give the lie to every pledge and promise made by the right hon. Lady and her hon.

Friends at the election? Therefore, should not she understand that not many people believe a single word that she is now saying?

The Prime Minister: There is a detailed reply giving the precise effects of the combination of national insurance contributions and taxation, bearing in mind that the Government believe in covering the great majority of their expenditure by taxation and national insurance contributions and not, as the last Government did, by a great deal of borrowing, particularly overseas borrowing. If the hon. Gentleman wishes to have both towel taxation and lower national insurance contributions—

Mr. Hamilton: The right hon. Lady promised that.

The Prime Minister: If the hon. Gentleman wishes to have lower taxation and lower national insurance contributions, he should state precisely where he would cut expenditure. In particular, if he wishes to have lower national insurance contributions, he should state where he would cut pensions and other benefits.

Mr. Ancram: Has my right hon. Friend had time to consider the Scottish unemployment figures today, which show a substantial reduction, not only in the unadjusted figures, but in the seasonally adjusted figures? Taken alongside falling inflation, falling interest rates and mortgage rates and growing order books in industry, does not that show that the Government's economic policies for the revival of the Scottish economy are now coming good?

The Prime Minister: The fall in today's unemployment figures below 3 million was welcome, but on the whole the figures for Scotland were better than those for many of the other regions. That is extremely good news for Scotland. Last week we had an extra order for Scotland—[Interruption.] I notice that Scottish Labour Members of Parliament do not seem to think very much of their constituents obtaining extra orders. We think that that shows that Scottish industry is reviving. John Brown Engineering, Clydebank has a letter of intent for a gas turbine power station, which is worth about £50 million. British industry is competing in overseas markets. Today's news is good news.

Mr. Healey: I thank the Prime Minister for allowing the Treasury to admit that it has already broken the major promise on which the Conservative Party won the last general election—that of a reduction in taxes.
Now that the collapse of law and order under her Administration has led her to claim that she has no influence over the amount of serious crime in Britain, will she pluck the dagger out of the Home Secretary's back, tell her supporters in the Tory gutter press to cease inflaming hatred and fear on this issue, accept the advice of the Minister of Agriculture, Fisheries and Food that unemployment is a major cause of the trouble over law and order, and do something about the unemployment figures, which are shown today still to be rising all over the country?

The Prime Minister: With regard to the right hon. Gentleman's first point, I point out that this Government have had to repay a large amount of the overseas debt that was left by the Labour Government, under his disgraceful leadership as Chancellor. Secondly, no person has done more for the numbers of police, their pay and morale, than my right hon. Friend the Home Secretary.
Thirdly, with regard to unemployment, the news today is good. I am sorry that the Leader of the Opposition is not here to say that. Numbers are down to below 3 million and, when seasonally adjusted, United Kingdom unemployment increased by only 5, 000, which is the smallest rise since November 1979. I recognise that the right hon. Gentleman would prefer the news to be bad. We prefer it to be good.

Mr. Healey: I recognise that the right hon. Lady would prefer the news to be good, but she has had to admit that in terms of taxation, law and order and the continuing increase in unemployment, her Administration has broken—[Interruption.]—every promise on which they won the last general election.

The Prime Minister: I did not hear the right hon. Gentleman's question, but at least my Administration has not got the nation bankrupt, as his did.

Mr. Patrick McNair-Wilson: Has my right hon. Friend yet had time to reflect upon the request of the Saudi Arabian Oil Minister and others that Britain should raise the price of North Sea oil? Will she reject this request and agree with me that the price of North Sea oil can be determined only by market forces and should not be used as a crutch to support the OPEC cartel?

The Prime Minister: It is, of course, the British National Oil Corporation that has to determine the price of oil from the North Sea. As my hon. Friend knows, that is determined directly in relation to the market price.

Mr. William Hamilton: Like gas.

The Prime Minister: Those are the terms of the Act left to us by the Labour Government. I agree with my hon. Friend that it is too soon to say what the price will be in the coming months. Many countries are using up their oil stocks at the moment, believing that they can replace them at a lower price. The price that we must follow is that which prevails on the world market.

Mr. David Steel: Reverting to the rising crime figures, will the Prime Minister take time to study the speech made in Glasgow, Hillhead by her predecessor, the right hon. Member for Sidcup (Mr. Heath), in which he said that if young people are hanging around streets, what can one expect but an increase in crime? Does she agree with him that that is part of the breakdown of society under the stress of unemployment?

The Prime Minister: I think that it is much too simplistic a reply to say that an increase in crime comes with an increase in unemployment. Certainly there is more crime today, but if the right hon. Gentleman's argument is right the figures would have been at their highest in the 1930s, when the proportion of the unemployed population was much higher than it is now. There has been a considerable increase in crime throughout a period of increasing prosperity, not only in this country but in other countries.

Mr. Skinner: asked the Prime Minister if she will list her official engagements for 23 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Skinner: When the euphoria about one month's unemployment figures has died down, perhaps the Prime Minister will bear in mind that today thousands of building

workers have been taking part in a march and a lobby on Parliament because 400, 000 construction workers are on the Tory scrapheap—the dole queue. Does she realise that it would not need anybody with a great deal of business acumen to use those construction workers to pile bricks of which there are 500 million in stock—on top of one another to provide homes for the 1·4 million families who need a home and for the 2 million houses that badly need renovating? If the Prime Minister does not have the ability or the will to carry that programme through, why does she not make way for an Administration that will rebuild Britain out of the slump?

The Prime Minister: It is certainly true that we could spend a good deal more on capital account if we spent a good deal less on current. However, local authorities have spent right up to and over their current allocations and have underspent their capital allocations. Nevertheless, it will not have escaped the hon. Gentleman's attention that my right hon. and learned Friend the Chancellor announced both a construction package and particularly a package to help labour-intensive construction, through special help for house improvement grants, particularly those that are notified this year.

Mr. Murphy: Does my right hon. Friend agree that criticisms from the Opposition Front Bench come ill from those Members—including the hon. Member for Edinburgh, East (Mr. Strang), who is unfortunately not in his place—who have reportedly advised civil disobedience? Will my right hon. Friend take this opportunity to condemn such speeches?

The Prime Minister: Those who advise civil disobedience cannot believe in parliamentary democracy.

Mr. Ashley: asked the Prime Minister if she will list her official engagements for 23 March.

The Prime Minister: I refer the right hon. Gentleman to the reply that I gave some moments ago.

Mr. Ashley: Now that there are 4 million on supplementary benefit, does the Prime Minister agree that the original concept of the scheme has changed from being a safety net for the few to being a poverty cage for the many? Is this an accurate reflection of the Government's philosophy, or is it an acknowledgement of their failure?

The Prime Minister: The number of people on supplementary benefit has never been the few the right hon. Gentleman claims. They have always been considerable, both in the number of claimants and claimants' dependants. I should not disagree with the right hon. Gentleman's assessment that the number of claimants is near to 4 million. They were already 3 million in 1977.

Q 4. Mr. Stanbrook: asked the Prime Minister if she will list her official engagements for Tuesday 23 March.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Stanbrook: Will my right hon. Friend confirm that the £10, 000 compensation awarded to the four Walsall dinner ladies would not have been possible but for the passage of the Employment Act 1980? Is it not unjust that the ratepayers of Walsall should be called upon to pay this amount, considering that the Labour council of Walsall was said by the tribunal to have had no intention whatsoever of reinstating the ladies? Is it not true that the


Labour candidate at Glasgow, Hillhead voted in favour of the Labour Government's legislation strengthening the closed shop?

The Prime Minister: I confirm that the Walsall dinner ladies would not have received any compensation but for the passage of the Employment Act 1980. The Labour Government left legislation providing that people could be sacked from their jobs because they refused to join a closed shop, and left without compensation. It is certainly true that Mr. Roy Jenkins was a member of that Government and, I believe, voted for the passage of the Act that left such people with no compensation. I share my hon. Friend's view. I think it wrong that the ratepayers should have to pay this compensation. It would be for the

ratepayers to consult the district auditor to àscertain whether there were any other methods of meeting the compensation.

Mr. Harry Ewing: Is the Prime Minister aware that it is widely reported in the Scottish press today that one of the items that she was discussing with her ministerial colleagues this morning was a possible new power agreement to allow the Invergordon aluminium smelter to re-open? Was that matter discussed? If it was, will the right hon. Lady make a statement on the future prospects for the aluminium smelter?

The Prime Minister: Discussions on the Invergordon aluminium smelter are continuing.

Questions to Ministers

Mr. Dick Douglas: On a point of order, Mr. Speaker. I indicated to your office that I wished to raise a point of order on an indication in a written answer that the Ministry of Defence has given in respect of shore establishments, especially on apprentice training and artificer training.
As you will have noticed, Mr. Speaker, I had oral question No. 34 on the Order Paper today. I take the view that to make such a statement in a written answer, especially when, with great respect to the hon. Member for Gosport (Mr. Viggers), a planted question is on the Order Paper, the hon. Gentleman having an oral question tabled on the same date, is a gross discourtesy to the House. Other Members who wish to protect the interests of their constituents should have been able to put questions to Ministers of the Ministry of Defence in open and public debate. This is not open government, this is subterfuge.

Mr. Speaker: I allowed the hon. Gentleman to express his point of view. He will understand that strictly he has not raised a point of order on which I can rule.

South Georgia (Incident)

The Minister of State, Foreign and Commonwealth Office (Mr. Richard Luce): I will with permission make a brief statement on developments in South Georgia, a Falkland Islands dependency.
We were informed on 20 March by the commander of the British Antarctic survey base at Grytviken on South Georgia that a party of Argentines had landed at Leith harbour nearby. The base commander informed the Argentine party that its presence was illegal as it had not obtained his prior authority for the landing. We immediately took the matter up with the Argentine authorities in Buenos Aires and the Argentine embassy in London and, following our approach, the ship and most of the personnel left on 21 March. However, the base commander has reported that a small number of men and some equipment remain. We are therefore making arrangements to ensure their early departure.

Mr. Denis Healey: Is it not the case that the Argentine party planted an Argentine flag on the island? Is it not odd that the right hon. Gentleman did not refer to that element? The Minister will recall that after his talks with the Argentine representatives in New York recently the Argentine Government said that unless they obtained a satisfactory agreement they would take unilateral action. Has the hon. Gentleman any evidence that the recent actions of these Argentine citizens was in fulfilment of that threat?

Mr. Luce: Yes, for a short period the Argentine flag was planted. It has now been removed. We are making arrangements to ensure that those who remain at Leith harbour will not do so for very much longer.
As I said when I answered questions on 3 March, the New York talks took place in a good spirit and there was a good atmosphere. The talks were not about the substance of the issue but about how we could adopt procedures to discuss the dispute in the longer term. Since then I much regret that some of the action that has been taken has not created a helpful atmosphere. In that climate I do not believe that it is sensible to discuss making further progress. If we want a peaceful solution, it is important that we should not proceed against a background of threats and provocation.

Mr. Healey: I agree with the hon. Gentleman's last remark. However, has he any evidence that this recent action by Argentine citizens took place with the support and knowledge of the Argentine Government?

Mr. Luce: The Argentine Government claimed that they did not know of this action and that it was action taken by a commercial company. We have to note that the ship that transported the party there, although a cargo vessel, is a naval transport ship. That is something that the House will need to note.

Sir Bernard Braine: It is important for us not to over-react in such a situation, but does my right hon. Friend agree that it is important to maintain the morale of the islanders and that it is pointless to continue asserting that the islands will remain British as long as the inhabitants wish to remain there while withdrawing tangible signs of support, such as the survey vessel? Can my right hon. Friend give the House any


indication that the Government intend to give tangible support to the Falkland islanders in this time of some anxiety to them?

Mr. Luce: I know that my hon. Friend has taken a keen interest in these matters over a long period. I must tell him that the Government are committed to support and defend the islanders and their dependencies to the best of their ability. I can assure him of that.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to call those hon. Members who have been rising in their places to ask the Minister a question.

Mr. A. J. Beith: Does the Minister realise that that is not the impression that the past actions of the Foreign Office have given? Does he think that this escapade might have been encouraged by the stance taken by the British Government over the leaseback proposals, for example? Will he make it clear that self-determination for the islanders will be the cornerstone of the Government's policy and that we shall stand by that principle?

Mr. Luce: I must make it plain once again, as I have done on several occasions, that there will be no question of any changes on the islands without the consent of the islanders. The islanders' wishes are paramount. Nor would we do anything without the consent of the House.

Mr. James Callaghan: Does the hon. Gentleman recall that he was warned that as soon as the news of the withdrawal of HMS "Endurance" became known to the Argentinians this type of escapade would be likely? Is it not a gross dereliction of duty on the part of the Government to persist in this course? Will they please give an undertaking forthwith that they will ensure that HMS "Endurance" is not withdrawn?

Mr. Luce: I take this opportunity to say again to the right hon. Gentleman—it is important that I should do so—that I give the firm assurance that we are now taking measures to ensure that those remaining on the island will not stay there any longer than is necessary. We are taking firm action on that.
HMS "Endurance" is in the area and is in a position to help if necessary. As for the future security and defence of the area, I must give a firm reassurance that it is the duty of this Government and of any British Government to defend and support the islanders to the best of their ability. The deployment of a defence force and the type of force that it should be are matters for my right hon. Friend the Secretary of State for Defence.

Mr. Nicholas Winterton: Does my hon. Friend agree that the incidents of the past few days are tantamount to the invasion of an independent country, whether or not the personnel were sponsored by a commercial company? Will he answer directly the question posed by the right hon. Member for Cardiff, South-East (Mr. Callaghan), the previous Prime Minister, who asked—I ask the same question from the Government Benches—whether my hon. Friend will ensure that HMS "Endurance" or another ship similar to her remains on station in that part of the world, in the South Atlantic?

Mr. Luce: I repeat again to my hon. Friend that HMS "Endurance" is in the area. It is not for me to answer questions specifically for my right hon. Friend the

Secretary of State for Defence on the deployment of forces. I must say as strongly as I conceivably can that it is our duty as a British Government to support and defend the islanders to the best of our ability.

Mr. Healey: Surely the Government put themselves in the situation in which they decided to withdraw HMS "Endurance". The only option open to them is to ask the Australian Government to allow HMS "Invincible" to spend some time around the Falkland Islands on her way to serve with Australian Royal Navy.

Mr. Luce: I do not think that there is any gain in my repeating an assurance for the fourth time. However, I assure the House that the position concerning our responsibilities to the islanders is as I have stated.

Mr. Michael Morris: My hon. Friend the Member for Essex, South-East (Sir B. Braine) mentioned tangible support; what exactly is tangible support in South Georgia and the Falkland Islands?

Mr. Luce: As I have already told the House, and as my hon. Friend knows, the Government will take and are taking firm action to deal with the situation. I can assure the House of that and that HMS "Endurance" is in the area now.

Mr. Eric Ogden: Is the Minister aware that we are worried not about his intentions but about those of Ministers in other Departments? Will he check the record of this afternoon's proceedings and see that his ministerial colleagues, when asked about HMS "Endurance", said that they could not give an answer as they were awaiting a statement from the Foreign and Commonwealth Office? Does he agree that they should get together? Is the Minister suggesting that a party of 50 or 60 Argentine Steptoes on a contract paid for, organised and controlled from Edinburgh and Buenos Aires can land on British territory for a commercial operation without the knowledge of the Foreign and Commonwealth Office, the British Government, the Falkland Islands Government, the British Embassy in Buenos Aires or the British authorities in South Georgia? Does he believe that that is preparedness? Is the Minister suggesting that the hoisting of an Argentine flag on British territory only weeks after the Government have made significant concessions to Argentina about sovereignty is of no political significance? Will he take the point made by—

Mr. Speaker: Order.

Mr. Ogden: —my right hon. Friend about—

Mr. Speaker: Order. The hon. Member for Liverpool, West Derby (Mr. Ogden) must not carry on speaking once he knows that I have risen to my feet.

Mr. Luce: I know that the hon. Member for Liverpool, West Derby (Mr. Ogden) takes a great interest in the islands and has recently been there. There is no question of the British Government having made any concessions—there is no such thing as a concession that the Government have made. The practical situation is that a landing by about 60 Argentines took place last Saturday We think that there are between six and ten left and we are taking steps to deal with them.

Mr. John Stokes: Is the Minister aware that when I was in the Foreign Office, there used to be a cruiser on hand and when one was in trouble


one called on the cruiser and on the next day it appeared? Can the Minister give an assurance, without going into detail, which one never expects the Foreign and Commonwealth Office to do, that there will be sufficient armed forces—naval, military or air—to defend the Falkland Islands and dependencies?

Mr. Luce: I am glad that my hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes) and I have that common experience. I reinforce the point that we have a duty to our islanders to support and defend them. That is precisely what we shall do.

Mr. Douglas Jay: Apart from HMS "Endurance", what other defence forces do we have in the area? If the Minister cannot tell us, will he arrange with his colleague from the Ministry of Defence to tell us now?

Mr. Luce: Although the details of the deployment of forces is for my right hon. Friend the Secretary for Defence, it would not be wrong for me to state that there is a garrison of British Marines on the Falkland Islands as well as HMS "Endurance".

Mr. John Blackburn: Will the Minister make a covenant with the House and the nation that the matter of the sovereignty of these islands is not an agenda item for discussion with any other power?

Mr. Luce: It would not be right for me to make a covenant with anyone, but the Government are absolutely certain that we have British sovereignty over the Falkland Islands. It is equally certain, as we all know, that Argentina also claims sovereignty over the islands. It is a dispute and it would be sensible for all the parties if the dispute were resolved sensibly and peacefully. We cannot do that against a background of threats. That is utterly unacceptable to the British Government.

Sir Frederick Burden: On a point of order, Mr. Speaker. Have any defence Ministers requested permission to make a statement on the cuts in the Navy and Navy establishments? Most hon. Members I am sure, are deeply concerned that they knew nothing about those cuts until they read of them in the newspapers. The cuts are such that I am sure that most hon. Members consider that a Minister should have been present to make a statement and to be subjected to questions on the matter.

Mr. Speaker: I have received no request for a statement.

West Midlands County Council (Abolition)

Mr. John Butcher: I beg to move,
That leave be given to bring in a Bill to abolish the West Midlands Metropolitan County Council.
My Bill is designed not as an attack on local government but as an attempt to make local government more local, to simplify its operation, to enhance the role of the district councillor, to make local government more understandable to voters and ratepayers and to help restore the respect and affection that West Midlanders once felt for their city and borough administrations.
Since 1970 an additional 500, 000 people have been recruited by local authorities, but before we criticise county and district councillors we must remember that local government has been subjected to an avalanche of legislation. In the period between the enactment of the Parish Councils and Burial Authorities (Miscellaneous Provisions) Act 1970 and the Highways Act 1980, more than 130 statutes were processed. Each added to or amended the existing mass of legislation affecting local government, including such items as the Breeding of Dogs Act 1973, the Dangerous Wild Animals Act 1976 and a statutory instrument entitled Grey Squirrels (Warfarin) Order.
The most significant statute of that period was the Local Government Act 1972, which set up a two-tier structure in large conurbations. After eight years the House is now in a position to judge the efficacy of that system. I single out the West Midlands metropolitan county for abolition, not because its performance is markedly different from that of other metropolitan counties, but because its baleful effect has been felt by my constituents in Coventry, which should never have been shackled to the West Midlands. The baleful effect has also been felt by my ex-colleagues on the Birmingham city council, who, like their counterparts in Wolverhampton, Walsall, Sandwell and Solihull, would have been quite capable of running one-tier, unitary authorities, had the opportunity continued.
Since 1974, that option has been removed. Proud cities such as Coventry and Birmingham relinquished their powers on strategic planning, public transport, major highways, refuse disposal, the fire, police and probation services and trading standards.
Today, duplication and confusion make life difficult for officers and county and district councillors alike. In highways maintenance, Coventry city council maintains 439 miles under an agency agreement, but the county council maintains 12 miles of strategic roads. There is therefore duplication of depots and highway gangs, which travel 20 miles to Coventry to carry out road works. Through one particular act of administrative lunacy, adjacent street lights are now maintained by city and county work teams.
With regard to environmental health and trading standards, the county is responsible for checking the quantity of lead in ceramic glass food containers, while the district is responsible for any breakdown of the element should it result in lead poisoning. The county has responsibility for an emergency plan to deal with an outbreak of rabies, while the district is involved in dog control and dog catching.
The county planners produce a structure plan as weighty as the E to K London telephone directory. In trying to ensure that the policies therein are achieved, they will duplicate the district council's development work in housing land availability, enhancement schemes, tourism and conservation.
In January 1979 the Labour Government published a White Paper on organic change. It said that the Government
believes that it is essential to the healthy working of democracy for local government to be accessible to the people it serves. Communities with an identity of their own and a capacity for organising their own services should so far as is possible, and where the nature of the service makes it appropriate, be allowed to manage their own affairs and be accountable to their own electorate for them. Large urban areas in particular generate problems of their own which need to be tackled comprehensively by district councils equipped with a wide range of powers.
On 21 June 1979 my right hon. Friend the Minister for Local Government and Environmental Services said in a written answer:
The Government are … committed to improving the efficiency of local government and to this end are urgently reviewing ways in which any unnecessary and wasteful duplication arising from overlapping functions under that Act"—
the 1972 Act—
can be eliminated."—[Official Report,  21 June 1979; Vol. 968, c. 686–87.]
In the context of the West Midlands, the case for an urgent review is now overwhelming. Sorely pressed ratepayers have had to contend with a metropolitan county council which has increased spending from £86 million in 1974–75 to £305 million in 1981–82 and which now employs 4, 900 full-time and 1, 000 part-time staff. Following the introduction of the revised block grant arrangement, the county now costs the average Coventry ratepayer £80·60 per annum, and the West Midlands, in spending 27·9 per cent. above its volume targets, is second only to the GLC at 29·9 per cent.
My hon. Friend the Member for Harwich (Sir J. Ridsdale) has for many years been conducting his own review and campaign for the reallocation of functions. My Bill does not go as far as he would like, but as a first step it provides for a reallocation of functions and the abolition of the metropolitan county tier.
It is not the intention of my Bill to cause a major upheaval by returning the differing and various powers of the county to the eight former county boroughs, the three municipal boroughs, one urban district and parts of two rural districts. It is, however, the intention to retain the seven large viable disricts created in 1974 and, with one or two exceptions, to transfer to them the same powers as were held by the old county boroughs.
Coventry is quite capable of running its own police and fire services and would be willing to integrate them with

the surrounding Warwickshire forces if required. I should not presume to advise my West Midlands colleagues to locate this function within their districts, but even if they decided to retain a West Midlands police force excluding Coventry, it could report to a watch committee appointed from councillors of the constituent district authorities.
Similarly, a passenger transport authority could control a West Midlands passenger executive through a chairman appointed by a committee of geographically representative district councillors. All other county functions should be returned to the district councillors, whose relief and rejuvenation would provide a shot in the arm for local government.
The West Midlands metropolitan county council is as useful to local government as the appendix is to the digestive system. Its presence is unnecessary and it becomes noticeable only when it malfunctions. Its enlargement causes financial pain and it is in the nature of that appendage that it can choose only to be an inert encumbrance or, through its growth, a danger to civic responsibility.
The residents of the West Midlands have had enough. The ratepayers, the councillors and many officers want their local government back where it belongs. Regardless of their political stance, they are willing to resume their responsibilities. My Bill is designed to give them that chance.

Mr. A. J. Beith: On a point of order, Mr. Speaker. I wonder whether you can help the House by telling us whether you have received any notification of an hon. Member wishing to oppose the Bill. I wonder whether the Minister of Agriculture, Fisheries and Food, for instance, has been given the opportunity to oppose this excellent Bill as it concerns his own county council.

Mr. Speaker: I had better confine myself to saying that I have not received any such notice.

Question put and agreed to.

Bill ordered to brought in by Mr. John Butcher, Mr. Jocelyn Cadbury, Mr. Patrick Cormack, Mr. John Blackburn, Mr. Anthony Beaumont-Dark, Mr. Iain Mills, Mr. Richard Shepherd, Mr. David Gilroy Bevan, Mr. George Park, Mr. William Wilson, Mrs. Jill Knight and Sir Julian Ridsdale.

WEST MIDLANDS COUNTY COUNCIL (ABOLITION)

Mr. John Butcher accordingly presented a Bill to abolish the West Midlands Metropolitan County Council: And the same was read the First time; and ordered to be read a Second time upon Friday 7 May and to be printed. [Bill 93.]

Orders of the Day — Social Security and Housing Benefits Bill

As amended (in the Standing Committee), further considered.

New Clause 6

NEEDS ALLOWANCE

'Regulations under section 26 shall provide that the needs allowance shall be not less than the sum of—

(a) the supplementary benefit long-term scale rate, and
(b) 40 per cent. of the national average council house rent, and
(c) the national average domestic rate, and
(d) the national average domestic water and sewerage charges, 

being in each case the prevailing weekly rate or charge appropriate to the size of the household for each category of needs allowance.'.—[Mr. John.]

Brought up, and read the First time.

Mr. Brynmor John: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this it will be convenient to take the following amendments: No. 70, in clause 27, page 22, leave out line 20.
No. 82, in page 22, line 27, leave out from 'Britain:' to end of line 30.

Mr. John: The new clause would clarify the needs allowance formula to be applied under clause 26. Frankly, for those of us who were members of the Standing Committee, if anything is in need of clarification it is the needs formula.
Our proposal differs from the needs allowance formula proposed by the Government in that it will include the whole average domestic rate instead of 40 per cent., as the Government propose. It differs also from the Government's intentions in that it would continue to include the housing element in the supplementary benefit uprating figure rather than merely in the housing benefit figure.
In this statutory hybrid, the Government have created two methods of uprating benefit—one for housing benefit, in which the housing element is included and one for supplementary benefit from which the housing element is excluded. This arises out of the Government's decision to change the basis, and the announcement to a startled world of the Rossi price index which would take the place of the retail price index for the purposes of the Bill.
At the moment, only 40 per cent. of the average domestic rate is included in the needs allowance. In my view, that is seriously deficient in that it fails to take account of the tapers and the way in which the increase affects a person whose income is less than the needs allowance. The Government's intention must surely be that a person whose average income is equal to the long-term supplementary benefit scale rate and who has average rent and rates should have 100 per cent. of his housing costs paid. The Government's formula plainly does not do that. Paragraph 41 of the explanatory notes, which were issued to the Committee at a fairly late stage, states that topping up payments of supplementary benefit will be paid

to people who are not initially entitled to supplementary benefit. In other words, the Government's objective is not achieved by the legislation as it stands. If it were, topping up measures would not be necessary.
The topping up payments are open to two major objections. First, there is the problem of identifying everyone who is entitled to such payments. If it is difficult to discover exactly who is eligible, this is bound to mean that a number of people who are eligible will not receive the payments. Secondly—and this should at least strike an echoing chord in the Minister's administrative heart—the topping up system will involve very high administrative costs in relation to the total scheme.
I remind the House of the history of topping up. Under the Government led by the right hon. Member for Sidcup (Mr. Heath), £3·50 was added to the needs allowance. Of that, there remains only 81p for a married couple and 31p for a single person. I have to ask the Minister of State today whether all of this will be clawed back in the next November uprating, as seems to be the logical progression of his policy, or whether some of the amount will still remain. In other words, will there be some topping up? If all of it is clawed back, there will be a saving to the Government which has been excluded from the nil cost formula. The Government have several times declared that this Bill has a nil cost, but they have not put a figure on the clawback of the supplement to the needs allowance. I believe that this hides a saving in the Bill. Where that is so we want to know how much is likely to be saved. We also want an assurance that it will be used rather than put back into the general account of the Treasury—to be lost for ever more—and that it will be used on improving the scheme as it stands in the Bill. That is how I believe the adoption of our formula as a needs allowance would work.
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The needs allowance as a package and in real terms fell for a married couple for the first time in 1981. That hastens and heightens the case for our new clause 6, and I hope that the Minister accepts it. It meets a real problem which his formula does not.
Amendment No. 70 would purely delete from the definition section in clause 26
'prices' does not include housing costs;
It would restore the RPI formula for prices. It would delete the Rossi formula. We tabled the amendment for a number of reasons which I set out in the Budget debate.
The Guardian this morning reported that the hon. Member for Bath (Mr. Patten) has stated that he is to call for a completely new formula for judging the costs of low-paid families. May I compliment him on the alacrity with which he has taken over, and assumed the lead in the campaign that I floated, without any response on his part, as long ago as the social security debate on the Budget. I welcome his support and I hope that it will be forthcoming, both vocally and in the Division Lobbies.

Mr. J. W. Rooker: The hon. Member for Bath (Mr. Patten) will get a job as a Whip.

Mr. John: the hon. Member for Bath may indeed get a job as a Whip, but I hesitate to think so. I think that that is more the province of those who are willing to wound but afraid to strike, and that the hon. Gentleman has not proved himself willing to do.
The effect of the change in the formula will be to uprate the supplementary benefit by ½ per cent. less than it would


otherwise be. The Government agree that that is so because they have already agreed to a valuation based upon savings in the package at £90 million. At a time when supplementary benefit recipients will for the first time in this country top 4 million, it is a totally unwarranted penalty upon the poorest in our society. The emphasis upon there being a smaller uprating depends upon the housing costs rising, as they have done in the last few years with massive council house increases, by more than the retail price index generally. It may be that the Government will take steps to ensure this by deliberately continuing the increase in council house rents. Without such action, however, some people have doubts as to whether the housing element will rise by more than the retail price index generally. In fact, one of the firms of City analysts, Simon and Coates, said that it would be something like 1·3 per cent. less than the rise in the RPI generally. If the Government recognise that this is so, they ought to recognise that they are taking very harsh action.
They should also give a guarantee to the House that they will stick by their formula. We have too much experience in this House of the Government finding a formula which they think will work in their favour and then abandoning it once it does not. This is the no-win philosophy of which I spoke when I was discussing the social security uprating within the Budget. For example, the tax and prices index was brought in by the Government as being the new Messiah. It was to replace the retail price index because it was a much more accurate and flexible determinant of people's living standards. In fact, the tax and price index rose by 15 per cent. as against 12 per cent., so it has been banished to some far distant corner as a monument to the Secretary of State for Energy's previous follies. It has been largely ignored.
What we do not want to happen is for the Government to bring in the new Rossi price index instead of the retail price index, and, when it works to their disfavour instead of their favour, suddenly abandoning it and going back to another formula which penalises recipients of supplementary benefit. The second point I raised in the Budget debate on this subject—and it met with no response from the Minister, no doubt through lack of time in his winding-up on that occasion—was the recognition that there is a differing pattern of expenditure among the poorest households in terms of income as compared with the average retail price index. For example, for the poorest 25 per cent. some basic items such as food and fuel play a more significant part in the weekly budget than they do in the average RPI.
Therefore, if housing costs are being taken out of the RPI because they are no longer relevant to that poorest section, we shall expect complementary action to be taken by the Government in order to have a much more sensitive measure of the weekly budget of a poor family in this country. For example—and I quote figures which I gave on the last occasion—the retail price index rose for the poorest 25 per cent. in our society, not by 12 per cent., which was the average last year, but by 14·4 per cent. Even when one excludes the housing element in that rise, one still has a rise of 12·6 per cent.— in other words, a greater rise than in the average RPI.
The minimum that the House would accept from the Government in order to tolerate the Rossi price index would be if, while removing the housing element from the calculation for the uprating of supplementary benefit, they also introduced a measure of the budgets of the poorest 25

per cent. in our society to give greater weight to the factors which affect them to a much greater degree than they affect other parts of society. In other words, they should make it truly representative of the budgets of the poorest 25 per cent. and not an averaging out, as is done in the RPI at the moment. But I do not believe that they will, and that is why I hope in this debate and in the Division that goes with it they wil be forced to do so.
Amendment No. 82 goes with amendment No. 70 so that the needs allowance is treated as one and we end what we believe to be an artificial distinction between uprating the needs allowance in housing benefit and in supplementary benefit generally.
I end by making two general points about this measure and about the subject that we are discussing. On 6 July 1981 Sir Geoffrey Otton gave evidence to the Public Accounts Committee. He is the second permanent secretary at the Department of Health and Social Security. Boiled down, his evidence was to the effect that the removal of the housing supplement from the supplementary benefit scheme might open the way to a further simplication of the scheme for claimants in their first weeks on benefit.
We have heard many times that the benefit scheme will be simplified next week or next month, or that something will happen. It has never happened. The manner in which the Minister said it will happen is much more alarming than the banal statement of intent. He referred to the possibility of what he called a much more bluntly tuned scheme for the first few weeks which might produce a staff saving of over a thousand.
Is that still the Government's intention? Does that still represent Government thinking? If so, how much more blunt is a bluntly tuned scheme? I suspect that it means, like all these euphemistic phrases, that the poor 'will be deprived of their rights, and that they will suffer from the lack of refinement in the scheme, and from the rush to save on civil servants' jobs to prove that the Government's election pledges have not all been totally destroyed.
Finally, will the Government clarify the question of the £90 million arising from the ½ per cent. less uprating? The Government have admitted that this will be the likely effect—although it is not definite—because of the movement of housing costs. There will also be a further undisclosed saving in the clawback provision for the 81p and 31p, but the Government apparently cannot afford the £35 million necessary to ensure that there are no losers under the scheme.
I emphasise, for the benefit of hon. Members who did not serve on the Standing Committee, that the Government cannot guarantee that there will be no losers under their new scheme. It would cost them £35 million to do that, which would be set against the £90 million saving produced by uprating supplementary benefit by less than the amount necessary had the housing element been included. As ever, the Government are taking a totally misleading stance.
The Government have the money if they choose to use it. They have the extra money they intend to save. Following the unemployment debate, and the Government's treatment of the 5 per cent. clawback, hon. Members will not be surprised to hear that the Government will not guarantee that there will be no losers. The Government should be in a position to give that guarantee. It is monstrous that they should deliberately introduce a


change in the law knowing that there will be losers when it would be comparatively cheap to make sure that there are no losers.
In the absence of a satisfactory reply from the Government, we shall divide the House to make known the strength of our feeling that the poorest sections of our community are constantly penalised, sometimes dramatically so, and always in the same direction. They are always losers, never winners. That is why the Government have invented the no-win theory of economics.

Mr. Chris Patten: I welcome the opportunity provided by the new clause, first, to deny the rumour which the hon. Member for Pontypridd (Mr. John) reported—that my ambitions may lie in the direction of a living death in the Whips' Office—and, secondly, to enable us to spend a little time discussing on the Floor of the House some of the issues raised so energetically in Committee on clause 26.
We had an interesting debate last week on new clause 4, when we sought to restore the 5 per cent. cut in unemployment benefit. That seemed a clear and simple issue, to which I hope we shall return on future occasions. This issue seems much less clear and rather less simple.
I have never thought that politics is, or should be, about logic, but I can see the logic in what the Government seek to do. Supplementary benefit scale rates have never covered housing costs. They are met separately, and to include them in the calculations of the RPI which we use for uprating supplementary benefit involves double counting: QED. Nevertheless, I am not entirely happy with the proposals put forward by my right hon. and hon. Friends. Double counting has been going on ever since supplementary benefit was first introduced in 1966. I do not see that it is any more logical to change now than it has been at any time in the last 16 years.
The introduction of the unified housing benefit does not fundamentally change the situation in any way. It is not more logical to make a change now, and in some ways it is decidedly less desirable. The number of supplementary benefit claimants is increasing, and many people are under acute pressure because of the recession and the rapid increase in fuel costs. Therefore, these are not ideal circumstances in which to make the change suggested by my right hon. and hon. Friends.
We are told that the change is justified on the ground that it is a rationalisation. Recent experience is that few rationalisations have been welcome, but perhaps I should leave that to one side. Nevertheless, I have a nagging doubt about the rationalisation argument. Would we have been so keen on pressing ahead with it if the result was to increase public expenditure rather than cut it? Would the arguments for rationalisation have been developed in quite the same way?

The Minister for Social Security (Mr. Hugh Rossi): My hon. Friend will be aware that, under the proposed formula, in those years when prices move ahead of the movement in housing costs there will be an increase in public expenditure. That has happened historically and it could happen again. We are aware that these proposals could increase public expenditure as well as decrease it.

Mr. Patten: I am delighted with that assurance. It deals with an argument that I intended to put to my hon. Friend. To borrow from my hon. Friend the Member for Grantham (Mr. Hogg), one can take that as a Second Reading assurance made on Report. It has all the binding commitment of having been made on Second Reading with no less significance for having been made later. I make that point because it was one that greatly exercised my hon. Friend the Member for Grantham last week. However, I am sure that I have my hon. Friend the Minister's assurance that it is a Second Reading assurance or commitment.

Mr. Rossi: It is a logical consequence of the way in which we have made the change. There is no qualification whatever. It will follow, as day follows night, that in those years when housing costs rise slower than the retail price index, supplementary beneficiaries will have a larger entitlement than they would if the housing costs had remained in the retail price index and thereby watered down the uprating.

Mr. Patten: I am delighted with that assurance. It is true to say, I believe, that when I raised this question in the Budget debate a Treasury Minister would have given that assurance if he had remembered to do so. He had other things to put on record at that time.

Mr. John: Is the hon. Gentleman reassured by the fate of the tax and prices index that has been conveniently forgotten in the dust of the Government cupboard because it does not yield the results that the Government thought it would yield? Is the hon. Gentleman not worried about the danger of the same fate befalling this index?

Mr. Patten: I am not quite so worried. I agree with the hon. Gentleman that the TPI was a good example of being too clever by about one and three-eighths but this is a statutory commitment, as my hon. Friend has reminded me. I am grateful for that. It is therefore slightly different from the TPI.
This leads me to the second point on which I would be grateful for some assurance. I refer to housing costs over the next year. The hon. Member for Pontypridd has mentioned the report of the firm of stockbrokers. There was also a letter in The Times last week from Mr. Piachaud referring to the report. It has been suggested that the Treasury has over-estimated the likely increase in housing costs over the next year by failing to take account of the welcome fall in mortgage interest rates, which is one of the benign results of the policies visited upon the rest of us by the Treasury.
If this turns out to be the case and if, later in the year, it becomes obvious that housing costs are rising by less than the RPI, it would be helpful if the Minister would make it clear that he will make the appropriate adjustments to the benefit rates later in the year, or that he will make the appropriate adjustments retrospectively next year. There is much talk about logic in relation to this subject. It follows logically from what my hon. Friend has already stated that this should be the case. If the Treasury has got things wrong in its assessment of housing costs, I hope that some appropriate adjustment to benefit rates will be made later in the year.
My third point is to ask whether the Government should not take their logic a stage further. This point was made reasonably by the hon. Member for Pontypridd. If it is


logical to take out of the basis for calculating supplementary benefit rates an element that they are not intended to cover—in this case, the housing costs—it is presumably logical to take a closer look at the price increase in those items that are covered, or are supposed to be covered, by the scale rates. There is a good deal of evidence that the manner in which the RPI is at present calculated is skewed against the interests of the poorest sections of the community.
The Low Pay Unit has done what appears to be fairly convincing work showing that over the last year, even if housing costs are excluded, prices for the poorer members of the community have gone up by about 2 per cent. more than the RPI for the rest of us. The poor are particularly badly hit because a number of items on which they spend a larger proportion of their income than the rest of us, such as fuel costs, have been going up faster than RPI. I have had one assurance already from my hon. Friend. I am confidently expecting a second. It would be nice to get three out of three. I seek the third assurance therefore that the Government are prepared to review the question of constructing a new prices index for poorer families. I ask them to review that question. An index for the poorer members of the community is long overdue.
Since we are hooked on logic and on rationalising things, it would be logical and rational to introduce such a prices index. I hope that the Minister, as well as assuring me on the point I have just made, will be able to indicate the Government's interest in proceeding in that direction

Mr. Reg Race: I should like to draw to the attention of the hon. Member for Bath (Mr. Patten) the fact that the Government already have a number of specialist price indexes that relate to the specific costs accruing to certain members of the community. There is, for example, an index that relates to the level of costs accruing to one and two-person pensioner households. One would have thought, following the logic of the hon. Gentleman's argument, that the Government would pay attention to that price index when constructing the level of benefit increases for pensioners in the November uprating.
The Government do not take that course because on some embarrassing occasions the pensioner price index rises at a more rapid rate than the retail price index. The real problem of specialist indices for the development of particular scales of benefit is that the Government can ignore them as they wish. I fear that unless the Government change their political, as well as their statistical, mind they will ignore any index that is constructed to reflect more accurately the real character of price increases for the lowest paid in our community.
The argument for a separate index for the low paid and the poorest in society is right. The matter has been argued in Committee on a number of Social Security Bills. The Government have never come forward with serious-minded opposition to the proposal. All that the Government say is that the retail price index reflects the generality of costs in our society to a wide range of people on a wide range of goods that they purchase.
The real problem with the retail price index is that it does not reflect the actual costs of a low-paid family when they are in work. Nor does it reflect the actual costs to a particular family or individual when that person is not in work. It does not reflect the disproportionate amount of family expenditure that goes on fuel and light, on food or on rent and rates. It is clear to all hon. Members that the

impact of rent and rates on families where no one is working or where an individual is alone is different from the impact on a family where there may be two, three or even four earners. I support the call by the hon. Member for Bath for more specific information than the retail price index provides about the manner in which costs are moving for the lowest paid. I would remind him, however, that not only statistics are important. It is also a matter of the political will to put that information into effect. One can have as many statistics as one likes. As the Minister for Social Security has shown over the last two years, it is what one chooses to do in office that matters and not what one is theoretically capable of doing.
We have here a classic example of a Government proceeding by sleight of hand. On the one hand, they say that it is totally logical for them to remove housing costs from calculation of supplementary benefit because a separate housing element has been paid in addition to the scale rate of supplementary benefit when calculating the needs of a particular individual or family. It is, therefore, logical, according to the Government, to take out the housing cost element from the calculaton of supplementary benefit scale rates because it is known that there is to be a separate housing benefit that can be claimed from the local authority. The trouble with that argument, although it is entirely logical so far as it goes, is that the Opposition strongly suspect the political intentions of the Government. We are right to suspect those intentions. It is likely, over the next 12 months, as over the last l2 months, that there will be a rise in housing costs—rent and rates—which will be substantially greater than the rise in the retail price index. We shall be looking not only at one housing cost increase or the decline in mortgage interest rate that will affect the housing cost element that the Government now put forward.
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That decrease in the retail price index will also affect the retail price index itself. Therefore, the difference between the reduction in housing costs and the reduction in the retail price index to perhaps about 9 per cent. on an annual basis will not be all that great because of the reduction in mortgage interest rates.
Therefore, the Government are taking out the housing cost from the RPI and uprating the supplementary benefit by less than it would otherwise have been uprated in order to save a substantial amount of money. That is precisely the effect of the Government's proposal and that is why we say in amendment No.70 that we want to remove the Rossi price index from this Bill, because this is sleight of hand and it also has a knock-on effect on other parts of the system.
I refer the Minister of State to our deliberations in Committee on 4 March, reported in columns 665 and 666 of the Official Report,  because some questions were asked there which, if I remember correctly, were never answered in Committee. They related to the knock-on effect of doing precisely what the Government are doing—in other words, taking out the housing cost element from the RPI for the purpose of supplementary benefit uprating. We realty want to know the answers to the questions that have been posed by SHAC, Shelter and others about the way in which this change in the calculation of benefits is going to be put into effect. We want to know the effect of that on all the points mentioned in columns 665 and 666, and we hope that the Minister will answer those points at the end of this debate.


He has had quite a lot of time since 4 March to consider his answer and I hope that he will be able to specify precisely what the Government intend on that particular point.
It is also of interest that when we discussed the very complicated new clause 26 in Committee it was discovered that one of the subsections of the new clause meant that the Government could weight the housing cost element in whatever way they saw fit. They could take mortgage interest payments, rent, rates and put them together to produce an average increase in housing costs. It enables the Government—and that is why these amendments are important—to weight the increases in rents against the increases in rates and to say that because council house rents are going up more rapidly than they would like they are to reduce their weighting in the housing cost index and save themselves a bit of money.
We want assurances that the Government will not do that in order to save public expenditure. There is nothing easier than for a Minister to make administrative decisions that may never see the light of day in this House and to reduce the effective level of benefit to the poorest people in society.
For all these reasons I hope that either the Government will accept our amendments, which I doubt, or in default of that the House will support them in the Lobby.

Mr. Andrew F. Bennett: I rise to support the two amendments we have tabled in this group. Before going into detail on the amendments, we must look at the background against which we are discussing them, because this is crucial.
First of all, we now have a record number of people depending on supplementary benefit. Those of us who listen to the message coming to us from our constituents realise very clearly that more and more of them are finding it harder to get by on the existing levels of supplementary benefit. Those levels are extremely mean. They do not allow the majority of people to have anything like a reasonable existence. Constituent after constituent comes to me in desperation at his inability to make ends meet. They point out—for instance—that the amount of jumble available at jumble sales is getting less and less because more people are on supplementary benefit and are having to buy clothing for their children and themselves at jumble sales. I repeatedly come across constituents who complain that they used to be able to get by on supplementary benefit because on Sunday they would take the children to visit their parents and their Sunday dinner would be provided. It was one way of making the supplementary benefit go a bit further. Now they find that their father has been made redundant and is on supplementary benefit. Thus the opportunity for one generation of a family to help out another generation disappears. The problems for those living on benefits get harder and harder.
It is against that background that we must judge the Government's attitude to the new Rossi price index. If the benefit level had been generous or even reasonably acceptable, it would perhaps have been unnecessary to quibble about 0·5 per cent. But, when we know that the benefit level is for many people already impossibly low, for the Government to have shaved off another 0·5 per cent. seems to me to be deplorable.
I do not believe that there is any logic in what the Government are doing. They say that supplementary benefit never took into account the payment of rent, so why should they take it into account in fixing the supplementary benefit? But supplementary benefit has to be used by people to pay both rent and mortgages. I accept that rent is normally paid as a supplement to supplementary benefit, and that mortgage interest payments are also a supplement. But when capital has to be paid off too—and many people with a mortgage and on supplementary benefit find that they still have to pay a small amount off the capital, particularly if they are middle-aged or older—part of the money they receive in supplementary benefit has to go to meet part of their housing costs. If all that is taken into account, only part of the housing costs should be taken out of the calculation of supplementary benefit. It was a mean trick of the Government to save 0·5 per cent., or £90 million.
The hon. Member for Bath said that it was not too bad, because the Government would guarantee that when housing costs went up by less the people would benefit. That is all right, but the Department of the Environment has more or less given a guarantee that rents are going to be forced up each year, so it is unlikely that that will happen for some time to come. That is certainly something that we have to take into account. It is very easy for Governments to give assurances that if something that is totally unlikely happens they might do something about it, but they have a habit of coming back to the House on supplementary benefit measures and saying that they did not expect this, they did not foresee that, and it is all very difficult, so they are not going to do anything. We can listen to Ministers giving assurances from the Despatch Box. It is pretty easy to assure the House at the moment that if rents do not go up as much as in recent years the Government will do something, but the Minister knows full well that the Department of the Environment is hell-bent on sending up housing costs so much that it is very unlikely that the Government will have to meet this commitment which the Minister has made.
The whole idea of introducing this measure was to make things simpler for claimants. Anybody who has read through the Committee proceedings or talked about the Bill knows that so far it has certainly not made life any easier for hon. Members. I do not think that it has made life easier for people in the Department. I do not believe that it will make life easier for those in local authorities who will have to administer it, or for claimants. It will be increasingly difficult for them to understand, and it will be particularly difficult for them to understand why the benefit is not adequate to meet their needs.
It seemed to me that the matter of the needs allowance was a major step in trying to persuade the Government to simplify the scheme. If the allowance is set a little higher, it will not be necessary to calculate so many extra topping-up amounts. Two things are likely to happen in the calculation of those amounts. First, there will be confusion. Secondly, there will be even more underpayment of benefit. Back in 1977 a total of £340 million supplementary benefit was underpaid. We have been pressing the Government to give us a more up-to-date figure for underpayment of benefits. I do not think that the Government have yet made a new calculation.
With the topping-up provisions in the Bill there is a grave danger of increasing the number of people who will not receive the benefit that we believe they need. By


accepting amendment No. 70 and thus increasing the needs allowance, the Government would reduce the need to top-up for many people, would simplify the system and in doing so ensure that more people received what they needed.
We have not proposed a very generous increase in the needs allowance. There is a case for going for an even higher allowance. Certainly if we used the money that the Government have saved by introducing the Rossi price index we could go for a slightly higher level. That would make the calculations much simpler. The allowance would be easier to administer and it would be easier to guarantee that those who needed the benefits received them.
The Government should say that they will not try to confuse the issue with a new retail price index taking out housing, but will stick to the old one, which contained a simple principle. It had a broad band of requirements, many of which people on supplementary benefit never benefited from, because they could not afford some of the luxury items that it contained. The Government should say that they therefore stick to it as a broad band but that they will increase the basic level and, secondly, will this year ensure that they do not allow it to slip back in real terms but will keep it moving forward.
In introducing the new scheme the Government should have gone for a needs allowance that was generous, preventing the need for so many extra topping-up payments, so that we really were moving to what the Government claim is a simplified housing benefit making matters easier for claimants. The scheme appears to be making it harder for them to see whether they have the right amount, and it is based on a system that will still pinch hard most of the poorest in our community.

Mr. Frank Field: I support the new clause and the amendments. Before speaking to them, I wish to take up some of the comments made by the hon. Member for Bath (Mr. Patten). I was not sure whether it was the hon. Gentleman or I that was thrown by the vision with which he began his speech. He seemed to tell the House that the nightmare that regularly visits him is the telephone call from No. 10, with the reward for his new behaviour in giving up supporting the Government for Lent being a spell in the Whips' Office. Sometimes nightmares come true.
The hon. Gentleman went on to tell the House—and here I may have been thrown—that there was some logic in what the Government were saying. We had a retail price index that had been used to gauge the size of the increase in pensions and other benefits, and those on supplementary benefit had their housing needs covered in full, so he asked why we should not take the housing element out of the RPI. Whether or not one is in the middle of a nightmare, one must concede a certain logic.
The lack of logic becomes more apparent when we look at the nature of the retail price index that the hon. Gentleman hinted at and that was elaborated in more detail by my hon. Friend the Member for Wood Green (Mr. Race). Of course, logic should prevail in this case, if the RPI were an accurate gauge of the living costs of ordinary families, let alone poor families, but we know from the submissions that were made, for example, to the Royal Commission on the distribution of income and wealth that in the 20 years since the middle 1950s prices for the poorest members of the community rose by about 30

percentage points more than those for the richer members of the community. Therefore, it is a very inaccurate gauge of the living standards of the poor.
However, there was at least some justice, if not logic, in having in the basket of goods on which the index was judged an element of housing costs that was largely irrelevant to the poorest, as their housing costs were covered by the supplementary benefit payment, because at least it managed to ensure that the price rise that was registered was nearer to the real rise in prices for the poor than it would otherwise have been.
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Therefore, taking logic to its full conclusion, I believe that there would be a case for our not pressing our main amendment if the Minister were honest with us and could give us a guarantee that the index that he has introduced is a temporary measure, conceived in haste and to be replaced by a more accurate measurement of the living costs of the poor in future years. If we knew that this was a one-off measure for one year, there might be a case for swallowing what the Minister is offering.
What is unacceptable is that the provision should remain on the statute book year after year. The hon. Member for Bath received an undertaking from the Minister, and I am sure that it will be met. But there are now built into the system a number of pressures to increase the level of rents in the public sector. If they are increased, the size of the subsidy to public sector housing will be reduced, and at the same time we shall start shaving off part of the increase in benefit that we would award to those on supplementary benefit.
Most Governments find themselves in a position in which it is difficult to manoeuvre. Therefore, £90 million becomes an important vision when the Government are trying to balance the books. I fear that the undertaking is not worth much. We now have a machinery that builds in pressures to increase housing costs when reviewing public expenditure and which at the same time will mean savings on the supplementary benefit front.
I hope that the Minister will answer carefully the points advanced from both sides of the House that maybe there is a case for change, but only if the change would give us a more accurate gauge of the living standards of the poor—not a change that would allow him to deliver £90 million or more to the Treasury.
I raise my second point on behalf of Age Concern. It is worried about clause 27, which we are in effect debating by asking the House to accept our amendments. Its worry is about the upgrading of the needs allowance. If Age Concern and I have read the clause correctly, it means that the Minister will have to lay before the House a report saying why he has not increased the needs allowance in line with his undertaking, unless the increase is so small that he considers that the loss in the uprating is "inconsiderable". I ask him what he considers "inconsiderable" in these circumstances. What does he mean by an "inconsiderable" difference? After all, in his short tenure as Minister for Social Security, he has presided over the loss of 1, 2 and 5 per cent. in benefit upratings. He sometimes presents these cuts as not being terribly important and occasionally they are considered to be important.
When asking the Minister what is meant by inconsiderable, I am reminded of the phrase used against President Nixon when this question was posed. "Who


would buy a second-hand car off this man?" was the phrase so often thrown at him. Considering what the Minister has done with the retail price index one might pose the question "Who would buy a second-hand price index off the Minister for Social Security?" There is an important point behind this retort. He has given himself powers not to report to the Commons if the expected and final difference between the needs allowance increase is inconsiderable. When the Minister replies, will he give the House some idea about what he now means by "inconsiderable"?

Mr. Rossi: This is a difficult and complex matter and I will do my best to thread my way through the arguments and give explanations asked for by Opposition Members and my hon. Friends, although I will not necessarily be able to satisfy them. I certainly cannot satisfy the Opposition by saying that I shall advise the House to accept this new clause or the amendments.
There is a certain amount of difficulty about this matter and a tendency to confuse two separate things—first, the uprating of the needs allowance and, secondly, the uprating of supplementary benefits. Those are two distinct exercises, having completely different consequences. The Bill relates to needs allowance and not to the uprating of supplementary benefits—that is dealt with by other statutes and will be discussed when we are dealing with the uprating of needs allowance.

Mr. John: rose—

Mr. Rossi: I shall continue at this point.
Clauses 26 and 27 relate to the uprating of needs allowances that determine the level of housing benefits for those who are not on supplementary benefit. Claimants on supplementary benefit automatically receive 100 per cent. of eligible rent and rates. Therefore, we are not talking about the supplementary benefit uprating provisions; they are irrelevant to our consideration of housing benefits. Housing benefits, as they relate to people not on supplementary benefit, will not be introduced until April 1983. Again, points made about the 1982 uprating are irrelevant. The needs allowance is relevant only to people not on supplementary benefit because the rate rebate and rate allowance scheme—tapers and all the rest of it—can relate only to those not on supplementary benefit. Those on supplementary benefit will receive 100 per cent. of their rent and rates.

Mr. John: The Minister is looking through the wrong end of the telescope, as usual. It is he, by his cutting of the common way of uprating between supplementary benefit and housing benefit, who is introducing this aspect. Therefore, it is not impermissible to state the effect on housing benefit or on supplementary benefit.

Mr. Rossi: I am sure that if it were not permissible the Chair—it is a matter for the Chair and not for me—would rule this discussion out of order. I shall deal with supplementary benefit, because it was raised. Because of the confusion that can easily arise, I was trying to make it clear that in the Bill and these amendments we are not strictly dealing with uprating of supplementary benefit. These are affected by the consequences of uprating supplementary benefit because long-term rates are an

element of housing needs. However, none of our amendments can affect the supplementary benefit uprating.

Mr. John: We cannot, even in a fairly minor debate, have such gross misinformation. If the Bill, as it stands, changes the basis of uprating, clearly the uprating is involved because it takes place on a lower base than it would have done but for the Bill.

Mr. Rossi: We are concerned with uprating of the needs allowance and we can change it. What we are not concerned with and what we cannot do in this Bill, with respect, is to change the basis of uprating of supplementary benefits. One will have a consequence on the other because one element of the needs allowance is, of course, the long-term rate of supplementary benefit. However, we cannot alter that today. That is all I am seeking to do. None of the arguments directed to the manner that supplementary benefits may or may not be uprated and the relevance of the RPI index to supplementary benefit can affect these amendments, because they can only be directed to the way that the needs allowance is calculated. I hope that I have made that point clear.
As we know and have discussed in Committee, the needs allowance is composed of two elements: housing and the main element covering all other living expenses—expenses other than housing. Naturally, we propose that uprating of the housing element should be considered by reference to changes in the level of housing costs. Because housing costs will be considered separately, it is simply a question of logic to provide for the main element to be considered by reference to changes in the level of prices, excluding housing costs. That will ensure that housing costs are not double counted and is not a ploy to reduced benefit.
This year's forecast is irrelevant; by the time of the 1983 uprating the relative increases in prices, including and excluding housing costs, could be different from today. That point was accepted in the arguments made.
I was asked questions concerning aspects of supplementary benefits and I shall try to answer them. Under the new basis for uprating supplementary benefit scale rates, all beneficiaries are fully protected against the expected rise in inflation by next November. That applies to pensioners, covered by the pledge made by my right hon. Friend the Prime Minister to protect them against price increases throughout the lifetime of this Parliament, and to all other beneficiaries. On heating additions, paid to over 2 million beneficiaries, we have gone further and raised their value in line with the forecast rise in fuel prices over the 12 months to November 1982, even though the 1981 uprating turned out to be more than enough to protect payments against rises in fuel costs to last November.
Because the scale rates have been raised by a few pence less than they would have been but for the change, and the difference for the single householder is 15p. a week in the long-term rate and 10p in the short-term rate—the difference for married couples is 25p and 20p respectively—a small number, up to a few thousand families, who would otherwise have qualified for supplementary benefit may lose benefit—that is the knock-on effect mentioned by the hon. Member for Wood Green (Mr. Race)—or fail to qualify from November 1982.
For some, this loss could be significant in terms of title to single payments, within the supplementary benefits


scheme, and outside the scheme to free NHS prescription charges, help with other NHS charges, especially dental and optical costs, refund of hospital fares, free welfare foods and free school meals. Almost without exception, those not qualifying for supplementary benefit could continue to receive free prescriptions, help with dental and optical charges, and free welfare foods on income grounds, but they will have to make a separate claim. So, whatever knock-on effect there is, the matter is dealt with and can be covered by making a separate claim.
5 pm
There is a knock-on effect in respect of free school meals, which were not specifically mentioned. Help is available to low-income families through the discretionary powers that local authorities may exercise. When we introduce the scheme, we shall give local authorities guidance on these matters, in the hope that they will exercise their discretionary powers so that people who might otherwise suffer from the knock-on effect will not be adversely affected.
It was suggested by hon. Gentlemen, in connection with the effect on supplementary benefits, that the Government were saving £90 million. We were asked whether that amount could not be used. I must correct hon. Gentlemen. The change will mean that the uprating will cost £10 billion—not £90 million—less in 1982–83, and £30 million less in a full year. That should be compared with the cost of making good the shortfall for supplementary benefits under pension age, which is £21 million in 1982–83 and £60 million in a full year. In addition, we are spending £10 million on raising the capital cut-off point and giving extra help with fuel bills.
These matters should be taken into account. We are discussing a saving that is the result of a change in the uprating in supplementary benefits, and I am saying that money has been used to give other benefits—benefits that did not exist before—to people on supplementary benefits.

Mr. Field: The Minister is saying that the introduction of this change will not lead to a saving of £90 million, as we had assumed, but of £10 million. When we debated the matter in Committee, he gave a formula for the difference between his new index and the retail price index, whereby each percentage point difference was a saving of £10 million. Is he now saying that, according to the forecasts for housing costs which, presumably, have been given to him by the Treasury, in a part year the difference in the two indices is only 0·1 per cent., and in a full year it is 0·3 per cent.? If so, why is he bothering to make the change at all?

Mr. Rossi: There is a ½ per cent. difference as a result of the uprating statement this year. It will produce a saving of just £10 million for 1982–83.

Mr. Field: If it is half a percentage point, according to the formula that the Minister gave in Committee, that will be £50 million. If the formula is £10 million for 0·1 per cent., then 0·5 per cent. is £50 million.

Mr. Rossi: In Committee we were talking about the relationship between the rise in prices generally—the price index, with housing costs included—and what would happen if the retail price index did not include housing costs. Perhaps I should quote what I said in Committee:
It is a question of the relationship between the rise in prices generally and the rise in housing costs. In a year when housing costs rise faster than prices generally, there is bound to be a

saving in the payments made for supplementary benefit if the housing element is not taken into account. But in years when other prices rise faster than housing costs, the reverse is true. Having taken that into account, each 0·1 per cent. difference in a year's uprating movement of the RPI as a whole and of housing costs element makes a difference of £6 million in a full year. For example, if housing costs were in advance of the general movement of prices in the RPI by more than 0·1 per cent. this year, the saving for 1982–84
that should be 1982–83—
would be £2 million. The relative difference between the two sets of figures has to be considered year in and year out. If housing costs relatively exceed the general movement in prices by 0·1 per cent. there is a saving to the Exchequer of £6 million in that year. If the reverse occurs there is a notional loss in that year. That is how the scheme will operate."—[Official Report, Standing Committee B,  2 March 1982; c. 641–2.]
All I am saying now is that the change in the uprating that has taken place will result in a saving of £10 million in the current year, and it will be the equivalent of £30 million in a full year.

Mr. Rooker: We never said that it would cost £90 million in terms of a cut. The sum of £90 million was used as an example, if the formula were applied this year, when the difference is 1½ percentage points. That is where the £90 million figure comes from. I do not believe that I or anyone else said that it was a cut of £90 million, but in advance of the Budget we did not have the Government estimate of the difference between the two indices in the year when the scheme starts.

Mr. Rossi: I accept that that is what happened in Committee, but the saving of £90 million this year has been bandied around today. I therefore wanted to make it clear that we are not talking about a saving of £90 million, which we discussed in Committee in the context that the hon. Gentleman explained. Since then, we have heard the Chancellor's announcement, and also my right hon. Friend the Secretary of State's statement about the uprating. So now we are talking about an actual saving of £10 million as a result of the change that is being made in the uprating.

Mr. Field: Is the Minister saying that the difference between the two indices would be 0·15 per cent?

Mr. Rossi: I repeat what I have already said. I shall not be drawn into any further mental arithmetic on this issue.

Mr. Field: I want to be clear about the magnitude of the difference. Is the Minister saying that the saving is now only £10 million? Let us understand the nature of the change which the Minister thought was so important. He is saying that the difference between the two indices is 0·15 per cent. Is that correct?

Mr. Rossi: I said that the saving this year, as a consequence of the change in the uprating that is being made, will be £10 million in 1982–83. With that, I am afraid, the hon. Gentleman will have to be satisfied. I have just received a note to say that £10 million is the correct figure for 1982–83.

Mr. Chris Patten: May I complicate the issue by trying to help my hon. Friend? I follow what he said about the £10 million. £30 million for ½ per cent. over a full year is obviously much less over 1982–83. So it is still ½ per cent. It is not 0·15 per cent., as the hon. Member for Birkenhead (Mr. Field) is trying to say. It is ½ per cent. over a year. Is that what he is saying?

Mr. Rossi: My hon. Friend is right.

Mr. Field: rose—

Mr. Rossi: Does the hon. Gentleman want a Division or not?

Mr. John: On a point of order, Mr. Deputy Speaker. It may be in order for hon. Members to interrupt each other's speeches, but is it in order for the Minister to interrupt my daydream?

Mr. Deputy Speaker (Mr. Bernard Weatherill): I thought I heard a comment that I wished I had not heard.

Mr. Rossi: It would seem that this is now a lighthearted occasion. I was just adding to it. That is the way it developed.
The hon. Member for Pontypridd (Mr. John), on introducing new clause No. 6, referred to the extra element in the current needs allowance. As he knows, that addition stems from the special addition of £3·50 to the needs allowance in 1973 as part of the Government's counter-inflationary policy. Subsequent Governments have eroded that. They have adopted the policy of phasing out the addition as housing costs increased. In that way, no one has suffered any cash loss. Therefore, the continued phasing out—the policy of both Administrations—would have happened whether or not we introduced housing benefits this year. To that extent, the introduction of housing benefits does not disadvantage anybody more than they would have been—if disadvantaged they were—by the phasing out of that additional extra element which both Governments agreed to do away with.

Mr. John: With respect, the question that I asked was whether in next November's uprating that additional advantage—81p for a married couple and 31p for a single person—will now be removed. If so, what do the Government say that will cost those at present receiving it in total benefit?

Mr. Rossi: I regret that I cannot give the hon. Gentleman the answer to that question. That is a matter that will be taken into account by the Secretary of State for the Environment who will be responsible for the next uprating. That will take place before this scheme comes into effect. Therefore, I cannot deal with that specific point. The hon. Gentleman will have an opportunity to raise that matter in due course. My responsibilities for this scheme will begin in 1983. Clause 27 spells out the Government's commitments on uprating the needs allowance in the context of that responsibility.
The case for new clause 6 relates to the introduction of a 100 per cent. rate element into the needs allowance. That is contrary to the way in which those matters have been dealt with hitherto. Hon. Members will be aware that the needs allowance is based upon the supplementary benefit long-term scale rates which we have already discussed—40 per cent. of the national average rates, 40 per cent. of the national council house rent, together with water and sewerage charges. The rationale behind those 40 per cent. figures is that a claimant whose income equals the needs allowance is entitled to 60 per cent. of his rent in rebate or allowance and 60 per cent. of rates as rebate. That is perfectly logical and nothing I have heard this afternoon suggests that it should be altered.
If we increase the rates element to 100 per cent.—contrary to that logic, it is true—the number of topping-up cases will be reduced. It is obvious that any increase in the needs allowance will have the effect of

reducing the topping-up cases. Again, that is one of the reasons—we discussed this in Committee—why we intend to add 75 per cent. to the needs allowance for pensioners.
5.15 pm
What we are discussing this evening under new clause 6 is, in effect, the case for a general increase in the level of needs allowance, which we are doing in another more modest way. I say "more modest way" because if the Government were to accept this amendment the cost would be in excess of £120 million. I have not got that money. What I have done is to use £24 million, which I have saved in the ways that Labour Members know, by adding 75 per cent. to the needs allowance for pensioners. That will help those in greatest need. What I have not got the resources for—

Mr. Andrew F. Bennett: rose—

Mr. Rossi: Let me finish the sentence. I do not have the resources to accede to the request that we increase the rates element in the needs allowance to 100 per cent. because the cost of that would be £120 million.

Mr. Bennett: The Minister has just referred to 75 per cent. in regard to pensioners. Surely he means 75p.

Mr. Rossi: I am most grateful. That was a slip of the tongue. We voted upon, and agreed to in Committee, a 75p addition to the needs allowance for pensioners. That will cost £24 million, which I saved by making other alterations in the scheme. That is the only latitude that I have and that is the only practical way in which it is possible for me to increase the needs allowance. I cannot increase the needs allowance in the way that is proposed here because of the cost involved. Quite apart from the question of costs, it is not the accepted way in which such matters are dealt with, namely, the uprating of the needs allowance.
Two questions asked by my hon. Friend the Member for Bath (Mr. Patten) remain outstanding. I must revert to the question of the uprating of the supplementary benefit. If the adjustment turns out to be incorrect, the Government will, as is the case with the forecast movement in prices generally, consider whether a compensating adjustment should be made at the next uprating. In reaching a decision, the Government will take into account the extent and direction—the shortfall or the overshoot—of the difference.
The Government feel that a broad-based index is the fairest method that we have at our disposal. We do not feel that we should impose choices on claimants by breaking down all items of expenditure. We should not isolate those who are worse off by making separate provisions. Housing costs are different, because, uniquely to supplementary benefit, separate provision is made for housing costs. Where individual circumstances demonstrate special needs, the supplementary benefit scheme helps with a sophisticated network of single payments and additional requirements.

Mr. Chris Patten: rose—

Mr. Rossi: My hon. Friend has scored two out of three on the questions that he has asked me. I must request that he be content with that.

Mr. Patten: I probably scored about one and five eighths out of three, rather than two out of three. Presumably the objective is to provide the poor with what


they need. Therefore, it does not seem unreasonable to devise an index that takes account of what they spend their money on.

Mr. Rossi: All Administrations have used the retail price index, because it is the most convenient way of finding out about the movement in prices and the inflationary effects on the cost of living. Obviously, there is no law of the Medes and Persians about that. If better means are found, they will be used. However, so far no one has found anything more satisfactory. That is not to say that the search will not continue.
In uprating, regard is paid not only to the retail price index, but, to a limited extent, to what has happened in the six months before the date of the uprating statement. To that extent, it is a guide. In addition, Treasury forecasts of the likely movement in prices are taken into account for the next six months until November, when the uprating comes into effect. Therefore, the retail price index is not the only factor to be taken into account when the uprating judgment is made. It has an important influence, but it is not the last word or the only factor to be taken into consideration.
The uprating judgment is not based solely on that. As I have said, it is not a question of the law of the Medes and Persians. If it is possible to find a better way of ascertaining the way in which prices or inflation have moved during the six months before the uprating statement, there is no reason why it should not be used. However, so far that has not happened and all Governments concerned with uprating have been defeated when looking for anything better.
Therefore, I invite the House to reject the new clause and the amendments.

Mr. John: I doubt whether I can do justice to the full flavour of the Minister's reply, because it was so confused that I am not sure what he was saying. However, I shall try to isolate some of his more egregious mistakes.
In response to the hon. Member for Bath (Mr. Patten), the Minister said that the Government did not take prices alone into account. If that is so, why is there so much boasting about uprating benefits to take account of prices? Of course, prices are taken into account. Those prices are in an averaged out form and that forms the basis of the retail price index. The Minister said that all Administrations had used the retail price index. However, he is changing the basis by removing the housing element. Therefore, next time he uprates supplementary benefit he should have a formula that takes account of the needs of those who live on supplementary benefit. It was said that that might represent an unacceptable intrusion into the circumstances of private individuals. However, it is quite possible for the Minister to have a formula. Indeed, as the hon. Member for Bath said, much work has been carried out by the low pay unit to isolate the factors that loom largest in the budgets of the poorest 25 per cent.
Therefore, the idea that it might be undesirable or impossible to take account of the needs of those who live on supplementary benefit, or that it might represent an intrusion into personal freedom is sheer nonsense. The Minister has given no pledge about uprating, but has referred only in the vaguest terms to the type of promise that the Department wishes that it had had from the former Secretary of State for Social Services, now the Secretary of State for Industry. Those terms are so vague as to be

meaningless. Therefore, those who will suffer because the housing element has been taken out have no assurance that they will be uprated.
I specifically asked the Minister to give an assurance that, even if the formula meant that prices moved ahead of housing costs, he would abide by that formula. The hon. Gentleman has chosen not to do so and has, instead, spoken in terms that may not have been totally unintelligible, but which were so vague as to provide the perfect get-out. We can conclude only that the Minister is keeping his options open and that if prices—excluding housing prices—move ahead, he will change the formula and relegate his new formula to the realms of the tax and prices index, from which the Government have now distanced themselves.
The Minister mentioned the cost of our various suggestions. If his formula takes account of average income and payments, there would be no need for topping-up. However, as topping-up payments are provided for, the Minister must know perfectly well that his formula will not meet every case. I objected to the topping-up process when I opened the debate, but I received no reply. For the Minister's benefit, I shall repeat one of my points. It is difficult to know who is eligible for the topping-up provisions. Given our experience of social security payments, if it is difficult to know who is eligible, a large percentage of those who are entitled to topping-up payments may not receive them. If that happens, there will be a substantial and continuing injustice.
Acceptance of our new clause will largely remove the need for topping-up payments. It would substantially diminish the need for such payments. Therefore., in a cumbersome and administratively costly manner, the Minister would have to achieve an objective that would be met more simply by accepting the needs formula set out in new clause 6. The Minister said that recipients of supplementary benefit were not under debate in new clause 6. That was true. The new clause refers to those who are slightly above the supplementary benefit level, and who, through thrift or otherwise, have just too much to qualify for supplementary benefit. I always thought that the Minister regarded that as a virtue. However, the formula will penalise such people and that seems an ill reward for them. It will not take account of their full domestic rate burden. New clause 6 seeks to deal with that.
I am sorry that the Minister was unable to confirm that the 81p and 31p will be taken away in the next uprating. In default of any information, I shall assume that it will be. I am also sorry that a figure cannot be produced. If the £30 million in a full year, which the variation between the one basis and the other will yield, is added to the amount that will be saved or cut, the total will at least exceed the £35 million that would be needed to ensure that the Bill provides for there being no losers. Indeed, as has been said, what the Government call a saving is, in every case, a cut for the poor.
It is all very well for the Minister to talk about a capital limit. He complained that supplementary benefit was not germane to the debate but then ranged widely, as if Marco Polo were remonstrating with a day-tripper to Brighton. The hon. Gentleman's remarks were all over the place.
5.30 pm
The Minister talked about capital limits and fuel additions. I would have thought that if one was germane so was the other. However, if he wishes to stick to the


point, his Bill has been constructed in such a way that some people who do not lose by it at the moment will lose by reason of the formula. He has extra money which he could use to put that right, but he has chosen not to do so. This is another classic case of the line having to be drawn somewhere. It will be drawn at the expense of the losers under the Bill, as it was against the unemployed.
The Minister will go down in history as "stick-to-the-formula" Rossi. It is rather like Latimer saying "play the man" when he was being roasted alive at the stake. The analogies are not dissimilar. As the Minister struggled with his figures and got deeper and deeper into the mire, one could only feel sorry for him. But that sorrow is tempered by the knowledge that he has created his own difficulties. He is one of the authors of the Bill and an author of the appalling complexity and subterranean deceit that is going on, which will mean that some people will have their supplementary benefit uprated by an insensitive formula that will remove one element while not paying due regard to others.
For that reason we propose to divide the House to show our total contempt of the way in which the Minister has approached the matter.

Question put,  That the clause be read a Second time:-

The House divided: Ayes 145, Noes 202.

Division No. 101]
[5.30 pm


AYES


Allaun, Frank
Evans, loan (Aberdare)


Archer, Rt Hon Peter
Evans, John (Newton)


Ashton, Joe
Ewing, Harry


Atkinson, N.(H'gey, )
Field, Frank


Beith, A. J.
Fitch, Alan


Bennett, Andrew(St'kp'tN)
Flannery, Martin


Booth, Rt Hon Albert
Fletcher, Ted (Darlington)


Boothroyd, MissBetty
Ford, Ben


Bradley, Tom
Foulkes, George


Brown, Hugh D. (Provan)
Freud, Clement


Buchan, Norman
Garrett, John (Norwich S)


Callaghan, Jim (Midd't'n&amp;P)
Golding, John


Campbell-Savours, Dale
Graham, Ted


Canavan, Dennis
Grant, George(Morpeth)


Carter-Jones, Lewis
Grimond, Rt Hon J.


Cartwright, John
Hamilton, James(Bothwell)


Clark, Dr David (S Shields)
Hamilton, W. W. (C'tral Fife)


Cocks, Rt Hon M. (B'stol S)
Harrison, Rt Hon Walter


Cohen, Stanley
Hart, Rt Hon Dame Judith


Coleman, Donald
Haynes, Frank


Concannon, Rt Hon J. D.
HomeRobertson, John


Cook, Robin F.
Hooley, Frank


Cowans, Harry
Howell, Rt Hon D.


Craigen, J. M. (G'gow, M'hill)
Howells, Geraint


Crowther, Stan
Hoyle, Douglas


Cryer, Bob
Hughes, Robert (Aberdeen N)


Cunliffe, Lawrence
Hughes, Roy (Newport)


Cunningham, G. (IslingtonS)
Jay, Rt Hon Douglas


Cunningham, DrJ. (W'h'n)
John, Brynmor


Dalyell, Tam
Jones, Rt Hon Alec (Rh'dda)


Davidson, Arthur
Jones, Barry (East Flint)


Davis, Terry (B'ham, Stechf'd)
Kerr, Russell


Deakins, Eric
Kilfedder, James A.


Dean, Joseph (Leeds West)
Kilroy-Silk, Robert


Dixon, Donald
Lamond, James


Dormand, Jack
Leighton, Ronald


Douglas, Dick
Lewis, Ron (Carlisle)


Douglas-Mann, Bruce
Litherland, Robert


Dubs, Alfred
Mabon, Rt Hon DrJ. Dickson


Dunlop, John
McDonald, DrOonagh


Dunwoody, Hon Mrs G.
McElhone, Frank


Eastham, Ken
McGuire, Michael(Ince)


Edwards, R. (W'hampt'n S E)
McKay, Allen(Penistone)


Ellis, R. (NE D'bysh're)
McKelvey, William


English, Michael
MacKenzie, Rt Hon Gregor





McWilliam, John
Silkin, Rt Hon J. (Deptford)


Marks, Kenneth
Skinner, Dennis


Marshall, Jim (LeicesterS)
Smith, Cyril (Rochdale)


Martin, M(G'gowS'burn)
Soley, Clive


Mason, Rt Hon Roy
Spearing, Nigel


Maynard, MissJoan
Spriggs, Leslie


Mikardo, lan
Stoddart, David


Mitchell, R. C. (Soton Itchen)
Stott, Roger


Morris, Rt Hon A. (W'shawe)
Summerskill, HonDrShirley


Morris, At Hon J. (Aberavon)
Taylor, Mrs Ann (Bolton W)


Morton, George
Thomas, Dafydd(Merioneth)


Oakes, Rt Hon Gordon
Thomas, DrR. (Carmarthen)


O'Neill, Martin
Thorne, Stan (PrestonSouth)


Park, George
Tinn, James


Parker, John
Varley, Rt Hon Eric G.


Parry, Robert
Wainwright, E. (DearneV)


Pitt, William Henry
Wainwright, R.(ColneV)


Race, Reg
Welsh, Michael


Radice, Giles
White, Frank R.


Richardson, Jo
Whitlock, William


Roberts, Albert(Normanton)
Williams, Rt Hon A.(S'sea W)


Robertson, George
Wilson, Gordon (Dundee E)


Robinson, G. (Coventry NW)
Winnick, David


Rooker, J. W.
Woodall, Alec


Ross, Ernest (Dundee West)
Wright, Sheila


Rowlands, Ted
Young, David (Bolton E)


Sandelson, Neville



Sever, John
Tellers for the Ayes:


Sheerman, Barry
Mr. Hugh McCartney and


Short, Mrs Renée
Dr. Edmund Marshall.




NOES


Alexander, Richard
Faith, MrsSheila


Alison, Rt Hon Michael
Fell, SirAnthony


Ancram, Michael
Fisher, SirNigel


Arnold, Tom
Fletcher, A. (Ed'nb'gh N)


Aspinwall, Jack
Fletcher-Cooke, SirCharles


Atkins, Robert(PrestonN)
Fookes, MissJanet


Atkinson, David(B'm'th, E)
Forman, Nigel


Beaumont-Dark, Anthony
Fowler, Rt Hon Norman


Bendall, Vivian
Fox, Marcus


Benyon, Thomas(A'don)
Fraser, Peter (South Angus)


Berry, HonAnthony
Fry, Peter


Best, Keith
Gardiner, George(Reigate)


Bevan, David Gilroy
Glyn, Dr Alan


Biffen, Rt HonJohn
Goodlad, Alastair


Biggs-Davison, SirJohn
Gorst, John


Blackburn, John
Gow, Ian


Boscawen, HonRobert
Gray, Hamish


Bottom ley, Peter (W'wich W)
Greenway, Harry


Brinton, Tim
Griffiths, PeterPortsm'thN)


Brooke, Hon Peter
Grist, Ian


Brown, Michael (Brigg&amp;Sc'n)
Gummer, JohnSelwyn


Browne, John (Winchester)
Hamilton, Hon A.


Buck, Antony
Hamilton, Michael (Salisbury)


Budgen, Nick
Hannam, John


Burden, SirFrederick
Haselhurst, Alan


Butcher, John
Hawksley, Warren


Cadbury, Jocelyn
Hayhoe, Barney


Carlisle, John (Luton West)
Heath, Rt Hon Edward


Carlisle, Kenneth (Lincoln)
Heddle, John


Chapman, Sydney
Henderson, Barry


Churchill, W.S.
Higgins, Rt Hon Terence L.


Clark, Hon A. (Plym'th, S'n)
Hill, James


Clark, Sir W. (Croydon S)
Hogg, HonDouglas(Gr'th'm)


Clarke, Kenneth (Rushcliffe)
Holland, Philip (Carlton)


Clegg, SirWalter
Hooson, Tom


Cockeram, Eric
Howe, Rt Hon Sir Geoffrey


Cope, John
Hunt, John(Ravensbourne)


Costain, SirAlbert
Hurd, Rt Hon Douglas


Cranborne, Viscount
Jessel, Toby


Dean, Paul (North Somerset)
JohnsonSmith, Geoffrey


Dickens, Geoffrey
Jopling, RtHon Michael


Dorrell, Stephen
Kaberry, SirDonald


Douglas-Hamilton, LordJ.
Kellett-Bowman, MrsElaine


Dover, Denshore
Knox, David


Dunn, Robert(Dartford)
Lang, Ian


Edwards, Rt Hon N. (P'broke)
Latham, Michael


Eggar, Tim
Lawrence, Ivan


Fairgrieve, SirRussell
Lawson, Rt Hon Nigel






Lee, John
Renton, Tim


Lennox-Boyd, Hon Mark
Rhodes James, Robert


Lester, Jim (Beeston)
Rhys Williams, Sir Brandon


Lewis, Kenneth (Rutland)
Ridley, Hon Nicholas


Lloyd, Peter (Fareham)
Rifkind, Malcolm


Lyell, Nicholas
Roberts, M. (Cardiff NW)


McCrindle, Robert
Roberts, Wyn (Conway)


Macfarlane, Neil
Rossi, Hugh


MacGregor, John
Sainsbury, Hon Timothy


Macmillan, Rt Hon M.
St. John-Stevas, Rt Hon N.


McNair-Wilson, M.(N'bury)
Shaw, Giles (Pudsey)


McNair-Wilson, P. (New F'st)
Shaw, Michael (Scarborough)


Major, John
Shelton, William (Streatham)


Marland, Pau I
Shepherd, Colin (Hereford)


Marlow, Antony
Shepherd, Richard


Marten, Rt Hon Neil
Silvester, Fred


Mather, Carol
Skeet, T. H. H.


Maude, Rt Hon Sir Angus
Speller, Tony


Mawby, Ray
Spicer, Jim (West Dorset)


Mawhinney, Dr Brian
Spicer, Michael (S Worcs)


Maxwell-Hyslop, Robin
Sproat, Iain


Mayhew, Patrick
Stainton, Keith


Mellor, David
Stanbrook, Ivor


Meyer, Sir Anthony
Stanley, John


Miller, Hal (B'grove)
Stradling Thomas, J.


Mills, lain (Meriden)
Taylor, Teddy (S'end E)


Mills, Peter (West Devon)
Tebbit, Rt Hon Norman


Miscampbell, Norman
Temple-Morris, Peter


Moate, Roger
Thomas, Rt Hon Peter


Monro, Sir Hector
Thompson, Donald


Montgomery, Fergus
Thorne, Neil (llford South)


Moore, John
Thornton, Malcolm


Morgan, Geraint
Townend, John (Bridlington)


Morris, M. (N'hampton S)
Townsend, Cyril D, (B'heath)


Morrison, Hon C. (Devizes)
Trippier, David


Morrison, Hon P. (Chester)
Viggers, Peter


Murphy, Christopher
Waddington, David


Neale, Gerrard
Walker-Smith, Rt Hon Sir D.


Needham, Richard
Waller, Gary


Nelson, Anthony
Ward, John


Neubert, Michael
Warren, Kenneth


Newton, Tony
Watson, John


Page, John (Harrow, West)
Wells, Bowen


Page, Richard (SW Herts)
Wells, John (Maidstone)


Parris, Matthew
Wheeler, John


Pawsey, James
Wickenden, Keith


Percival, Sir Ian
Wilkinson, John


Peyton, Rt Hon John
Winterton, Nicholas


Pink, R. Bonner
Wolfson, Mark


Pollock, Alexander
Young, Sir George (Acton)


Porter, Barry
Younger, Rt Hon George


Prentice, Rt Hon Reg



Proctor, K. Harvey
Tellers for the Noes:


Rathbone, Tim
Mr. David Hunt and


Rees-Davies, W. R.
Mr. Tristan Garel-Jones.

Question accordingly negatived.

New Clause 7

TAPERS (No. I)

'Regulations made under section 26 shall provide that if a person's weekly income exceeds the needs allowance, the rebate or allowance payable to him shall be reduced by the percentages shown below, being in each case a percentage of the amount by which his weekly income exceeds the needs allowance:—

(a) in the case of a rent rebate or rent allowance, 19 per cent.;
(b) in the case of a rate rebate, six per cent. '.—[Mrs. Ann Taylor.]

Brought up, and read the First time.

Mrs. Ann Taylor: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this, it will be convenient to take the following: New clause 8—Tapers (No. 2).
Amendment No. 86, in clause 26, page 20, line 31, at end insert—
'(2A) Regulations under this section shall provide that where the weekly income of the tenant and his spouse is equal to the needs allowance, the rebate or allowance shall be equal to the amount by which the weekly rent exceeds the minimum weekly rent, and that the minimum weekly rent shall be—

(a) in the case where the weekly rent is 25 per cent. or more above the national average council house rent, 40 per cent. of the amount of the rent up to the level of 25 per cent. above the national average council house rent plus 15 per cent. of any amount of the rent above that level, or
(b) in all other cases 40 per cent. of the weekly rent.'

Mrs. Taylor: The Opposition believe that new clause 7 is extremely important, although it does not make the scheme entirely acceptable. There is a basic problem with the housing benefits scheme proposed by the Minister, because he is still trying to introduce a scheme which has a nil cost overall. It is a significant failing on the part of the Minister that he has not even tried to get the money out of the Treasury in order to make it a good and reasonable scheme.
We do not consider that new clause 7 is ideal or that it is a complete improvement on the scheme because it does not abolish all the losers under the Government's proposals. In new clause 7 we have made an attempt to be constructive and to propose a change which improves the scheme in the Government's terms. It is an attempt, in the best sense of the words, at constructive opposition. I hope that the Minister will constructive and say that he is willing to accept the proposals because they would, undoubtedly, make the scheme much better from everyone's point of view.
The proposals in new clause 7 reduce the number of losers. The losses that different categories of individuals will suffer are reduced. The proposals that we are suggesting improve the administrative simplicity of the scheme. We believe that the changes can all be done within cost constraints that ought to be acceptable to the Minister
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I think that the Minister is aware that, since the publication of the consultative document last year, much concern has been expressed by hon. Members on both sides of the House and by many organisations outside that over 2 million households will lose because of the changes that he proposes. I remind the Minister that that means that the weekly incomes of more than one in ten households will be lower because of the proposed changes.
There are so many losers simply because of the Minister's insistence that it is possible to go ahead with a nil-cost scheme. The Minister is simply redistributing resources from the poor to the very poor, whereas his priority ought to be to improve the situation of all those whose incomes are so low that they are in receipt of housing benefit in any form.
It has been obvious in the discussions that we have had that at times the Minister has shown himself to be uncomfortable about the consequences and implications of the no-extra-cost constraint that he has set himself. At various times he has suggested minor improvements in the scheme in order to divert attention from the total number of losers and in order to claim that he has been doing something for some categories of people.
The latest announcement that the Minister made was the increase of 75p in the needs allowance for pensioners. That is one of the measures that the Minister has


considered as a means of reducing the number of losers by a small amount. The Minister has opted for the 75p increase in the needs allowance for pensioners because he has been concerned to reduce the number of topping up cases. While we understand that he wishes to do that because of the administrative complexity of the topping up procedure, we think that there are some adverse consequences of that proposal. It is not an adequate proposal to make the scheme good, not least because it takes only 16, 000 people out of topping up cases and leaves 123, 000 people still within that category. If the scheme is to cost £24 million, that does not seem an effective use of that amount of money.
It is against the background of the Government's approach on the number of losers that we have tabled new clause 7. As I have said, it is an important new clause and one that we hope the Minister will see his way to accepting.
The current position with regard to tapers above the needs allowance is that claimants pay an extra 17p of their rent for every pound that their income exceeds the needs allowance. The Government propose to change that figure to 21p. That means that the claimants will be 4p in the pound worse off in the part of their income that is above the needs allowance. Similarly, for rate rebate the Government propose to change the figure from 6p to 7p. That means that the claimants are 5p in the pound worse off on their income that is above the needs allowance. The Minister ought to acknowledge that that is not an insubstantial amount for the categories of people whom we are talking about, because often those are people who are already verging on the poverty trap.
In new clause 7 we are suggesting that the tapers in the scheme should be 90 and six—90 per cent. for rent and rates allowances and six per cent. for rate rebates. In doing this we are eliminating 3p of the 5p in the pound loss that the Government are writing into the scheme from the start. A loss of 2p in the pound for these people on the incomes above the needs allowance is not our preferred position, but it is something that the Government ought to consider seriously because the amendment has many advantages.
One of the effects of the amendment is to reduce the number of losers under the scheme by 1·1 million households. That is reducing the number of losers by half, which is an important factor. Moreover the proposals that we have put forward mean that individual losses will be less. This specific proposal means that 500, 000 applicants will be safe from losing more than 50p a week. That is quite a substantial number.
This suggestion makes it unnecessary to operate the 75p safety net that the Minister has been proposing. I do not think that he or the local authorities are sure how it will operate because the number of people who will lose more than 75p per week under new clause 7 is relatively small. The people who will lose will, in the main, only lose up to £1 a week and they will all be those whose income is more than £35 above the needs allowance. The amendment has the benefit of improving the simplicity of the scheme, and therefore its administration, and it ought to be attractive to the Minister.
The total cost of the scheme that we put forward in this clause is calculated on the basis of the information that the Minister gave us during questions in Committee, and on his figures the cost is £46½ million. In the context of

overall subsidies on housing, that is a very small amount of money. There is the £2, 000 million that goes in tax relief for mortgage payments, beside which £46½ million is chickenfeed. We know that the Minister is reluctant to go to the Treasury and ask for more money for housing subsidies for the very poor so we have to tell him that it is possible for him to find that money from the changes that he has already made in housing benefits.
For a start, the Minister has admitted to the House that the changes in the formula for assessing the needs allowance for supplementary benefit is producing a saving to his Department in a full year of £30 million. That was the figure quoted by the Minister when he followed advice, stuck to the formula and told us exactly what the figures were.
Therefore, the Minister has saved £30 million in a full year from a removal of the housing element. That £30 million ought to be redirected into other forms of housing subsidy for the very poor—that is, those affected by the legislation. That is £30 million of the Minister's costs. The 75p maximum safeguard loss, the safety net mechanism that the Minister is considering introducing, will cost between £40 million and £50 million. Those again are the Minister's figures. Our new clause will make that safety net unnecessary and therefore £40 million to £50 million can go towards financing the new tapers suggested under new clause 7.
The scheme that we are putting forward is administratively simpler than the Government's proposals, so there will be other savings to local authorities which, although we cannot quantify them, will be almost certain to be in the region of the £1 million to £1½ million that we need for this scheme to pay for itself. What is more, that does not take account of the 31p and the 81p about which my hon. Friend the Member for Pontypridd (Mr. John) was talking earlier.
These savings are based on the figures that we have at the moment and it is possible that in a future year there will be even higher benefits to the Department because of the exclusion of housing costs from the RPI. It is important that the Minister should understand that it is within his power to justify to his right hon. and hon. Friends in the Cabinet and the Treasury that this scheme can be done without any new finance for his Department simply by using to better effect the savings that the Minister has already made.
Given the kind of rent and rate increases that people have suffered recently, the Minister ought to reconsider his approach to the problem because he is increasing the poverty trap for many people by making them lose the 5p in the pound above the needs allowance. We are trying to put forward a constructive alternative so that the Minister will not push so many people into the poverty trap. I hope that the Government will consider this new clause carefully.

Mr. Andrew F. Bennett: I support my hon. Friend the Member for Bolton, West (Mrs. Taylor) on new clause 7 and ask the Minister to support new clause 8. The question of tapers is a difficult issue. I shall look with interest tomorrow at the newspaper reports about proceedings to see which journalist manages to explain the idea of tapers in a short, snappy sentence or two so that anyone outside can understand it. I shall listen with considerable interest to "Yesterday in Parliament" to see how someone manages


in a few seconds to paraphrase the comments about tapers so that they may be understood. I think that we shall find that the press have difficulties.
I recommend to hon. Members who are now in the Chamber that they ask their colleagues who come to vote what they understand about tapers. I suspect that we shall not find many hon. Members who understand the meaning of tapers. I also suspect that if we start to ask the experts outside, who pass advice to us, we shall find that they are not happy about tapers. I have yet to find anyone who could give me a briefing about tapers without immediately turning to a piece of paper and starting to draw a graph. One of the problems of talking in the Chamber is that we cannot put up visual aids to explain the question.
It is against that background that we have to remember why the Government are introducing a Bill that is meant to simplify and make more understandable the social security and housing benefit scheme. It is worrying that the vast majority of hon. Members and people outside find it almost impossible, even if they get down to reading our proceedings, to understand the issue of tapers. The task is very difficult.
We must try to come to grips with the problem. We should remember that a certain proportion of people have a 100 per cent. payment of their rent and rate rebates because they are on supplementary benefit. We are then concerned with the remainder of those who have so far been getting some assistance from the housing department for their rent and rates.
In working out the amount of assistance that those people receive the Government have thought up the idea of needs allowances. The needs allowance has little practical effect for these individuals. In effect, the system means that we are merely thinking of a sum from which we can start to make the calculations. In the previous debate we were arguing that the sum should be higher and that the calculations should start from a higher base. That argument having been rejected, we must now consider the way in which the calculations are made.
6 pm
My hon. Friend the Member for Bolton, West, in moving new clause 7, was arguing on behalf of those who have an income above the needs allowance and trying to establish what proportion of their income above the allowance should be used to meet their rent and rates until the stage is reached when they receive no assistance at all. New clause 8 relates to those who have an income that is below the needs allowance but is not sufficiently low to enable them to qualify for 100 per cent. rebates because they are on existing supplementary benefit levels. How much of each pound that they have less than the needs allowance should be contributed towards rent and rates and how much should be left with them to spend in other ways? It is a fairly complicated concept.
My hon. Friend the Member for Bolton, West was trying to improve the situation for those who have incomes above the needs allowance so that they may retain a little more of their income to spend on things other than housing and have to contribute a little less of it to their housing needs. I am concerned that those who are between the needs allowance and the level at which they would receive 100 per cent. supplementary benefit should have their positioned eased. I have slight reservations about new clause 8, which stands in my name, because on reflection I am not quite sure whether I do enough to help the

disabled and one or two other groups, especially the unemployed, who are on short-term benefits if they come into this category.
The basic issue is how much assistance the Government should give to those who on the whole will lose by the introduction of the scheme. My plea to the Government is to accept new clause 7, which would give some assistance to those who are moving into smaller and smaller amounts of help with their housing because they are above the needs allowance, and to give more assistance to those who come between the needs allowance and the level at which supplementary benefit is paid.
During the 1979 election and the election before that the Conservative Party made great play of the "Why work?" syndrome. It was argued that people were better off when in receipt of benefits. Since the election the Government have made great claims about the poverty trap. The gentler the line of the graph, the gentler the taper that we introduce and the less severe the poverty trap will be. If the Government want to live up to their election promises, it is important that they produce the gentlest taper possible. However, it seems that with this measure the Government are making the poverty trap a little harsher and a little deeper.
If new clause 7 is carried and new clause 8 is not, we might be making ourselves a little more of a trap for those in receipt of earnings between supplementary benefit level and the notional needs allowance. Therefore, I hope that the Minister will have sympathy with both the new clauses and will appreciate that the graph should be as gentle as possible to ensure that the transition from 100 per cent benefit to no assistance at all is as long and as gentle as possible, so that we give as much incentive as we can to those who are in work or in receipt of high levels of benefit and ensure that they get the full value from the extra pound or the extra pence and do not feel that every extra penny they earn is clawed back by the Government because they lose their housing benefit or rent rebates.

Mr. Race: The new clause is designed to remove the 1, 990, 000 households that will be caught by the Government's new reduction of social security benefits. It is designed to stop the Government attacking once again the living standard of the poorest in society by trimming 5p, 10p, 15p or 20p of their weekly benefit from the local housing office. It is important that the public should recognise that the Government intend to do that. I strongly suspect that many families will not even recognise that their benefit has been reduced. If they realise that it has and they ask for an explanation, I suspect that they will not get an adequate one. When we were debating an earlier new clause even the Minister presented a convoluted hotch-potch of ideas which he could not explain to the House adequately.
The new clause seeks to stop nearly 2 million families from being rooked by the Government. It would halve the number of losers and reduce the extent of the losses, saving about 500, 000 households from losing more than 50p a week. The clause also removes the need for the 7.5p safety net, which the Government have introduced for 12 months initially. We do not know how long this special offer will last. It may last for no longer than the price of a packet of soap powder on a shelf in a supermarket. It may be with us for 12 months and no longer.
Once the safety net is removed the chances are that many more people will lose a lot more in benefit each


week. The safety net is the only thing that stands between them and the full rigours of this so-called no-cost system. It will have a cost to those who are being asked to accept a reduction in their social security and housing benefits. They will lose money as a result of the scheme that the Government are proposing.
We have been told by the Minister on Second Reading, in Committee and on Report, that it is a no cost scheme. As I have said, it will have a cost to those who will lose benefit. It will have a cost to those who will lose because of the poverty trap. It will have a cost to those who will not receive passported benefits in other parts of the housing benefit changes that have been announced by the Government. Therefore, I hope that the Government will change their mind and accept new clause 7, or introduce new tapers that will remove or reduce the number of losers substantially.
Other Social Security Bills have been introduced in this Parliament and the Government have said that changes in the benefit system must be introduced without any net cost to the Exchequer. I suspect that 2 million households will be worse off as a result of the Bill's enactment because the Minister was told plainly by Treasury Ministers that he could not have any substantial sum to make the scheme work and to make it palatable to the beneficiaries. I and many of my hon. Friends believe that a small additional sum would have greatly improved the scheme. There would have been no losers and there would have been hardly any hassle in the House.
The cost of introducing new clause 7 would be about £46·5 million. That would be a microscopic proportion of the housing support that is given to the community. It must be compared with the amount of money that is being squandered in other parts of the public sector, or with the sums that are being given to those with very large mortgages in the form of interest relief on their income tax.
It is perfectly plain that the Government could have advanced a scheme that would have cost the Treasury little and would have ironed out the awful inequities that now exist in the system. I am worried that there will be a repetition of the Government's first Social Security Bill in 1980. The Government said that they must do it on a no-cost basis. They said that they were giving rights to people, not giving discretionary duties to local social security offices, and therefore they would not try to pump any more money into the system.
If, as the Government are doing by still having losers in the scheme, they continue to neglect the basic rates of benefit, or in this case, the basic level of the needs allowance, they will not help but hinder people and cut their social security benefits. Unless the Government change their mind, nearly 2 million families will be worse off. They will not thank the Minister for what he has done.

Mr. Rossi: New clause 7 proposes rent tapers above the needs allowance of 19 per cent. and rate tapers of 6 per cent. as compared with the Government's proposals of tapers of 21 per cent. and 7 per cent. respectively. As the hon. Member for Bolton, West (Mrs. Taylor) has said, the object is to reduce the number of losers that otherwise might occur in the scheme.
The tapers suggested by the Opposition would cost £46·5 million more than the Governments proposals. The hon. Lady's figures were correct. That money must be

found somewhere. The hon. Lady suggested that it should be found out of the money made available by the decision to take housing costs out of the index used for uprating supplementary benefit, from the money being used for the 75p maximum loss transitional safeguard and from the administrative savings to local authorities from the elimination of that 75p safeguard.
The Opposition's argument is wrong on two counts. First, as I have explained all along and as has been pointed out by Opposition Members, I must introduce the housing benefits scheme on a neutral-cost basis. In other words, the scheme must cost no more than the current scheme that it will replace. It is no good Opposition Members arguing that I can find the £46 million or £47 million needed for their proposals from outside the scheme.
The Government decide their priorities in the light of available resources. Those priorities mean that there is no extra money for housing benefits. That is the situation with which I am faced. Of course, I am able to make the best possible scheme from existing resources. I hope that that is what I have done. It is certainly what I have tried to do. The Opposition have not been able to produce a better scheme which operates within the constraints that I have described.
6.15 pm
I have transferred up to £10 million from administrative expenditure to benefit expenditure. That saving arises because the new scheme is being introduced. Therefore, administrative costs of £10 million are being translated into benefit costs. That comes about because the Government are creating the new housing benefit scheme.
I have also protected the poorest. There are no losers below the needs allowance. I have used resources to give extra help to many pensioners. Obviously I could have done more, had I been given more resources—

Mr. Andrew F. Bennett: rose—

Mr. Rossi: —but the money is not available to me and it is a waste of time to imagine that it is.

Mr. Bennett: Will the Minister give way?

Mr. Rossi: I listened to the hon. Member for Stockport North (Mr. Bennett) carefully and with patience. Perhaps he will allow me to finish and try to catch your eye later, Mr. Deputy Speaker. My second reason—

Mr. Bennett: Will the Minister give way?

Mr. Deputy Speaker: Order.

Mr. Rossi: My second reason for rejecting the Opposition's argument is that their sums are wrong.

Mr. Bennett: Will the Minister give way?

Mr. Rossi: No. I shall not give way. I agree that the benefit saving from removing the transitional taper protection is available. Indeed, I am using the money—

Mr. Bennett: Will the Minister give way?

Mr. Deputy Speaker: Order. The Minister has said that he is not giving way.

Mr. Rossi: I am using the money towards the extra 75p on the needs allowance for pensioners. However, the administrative savings are not available in that the taper protection is envisaged as being only temporary. The administrative costs are also only temporary, so there are no permanent savings to be made.
Money from the supplementary benefit uprating is also not available. Apart from the fact that the money is not a part of the housing benefit scheme, it is neither a steady nor a permanent feature. The £30 million arises only because of the relationship between the RPI and the RPI less housing costs in 1982. In other years, the relationship will be different and sometimes it will be reversed.

Mr. Race: It all depends on Government policy.

Mr. Rossi: If savings in 1982 from the change in the supplementary benefits uprating provisions are to be built into housing benefits, we would logically have to take costs out in the years when that occurs. Thus, for the costing of the package there would be no £30 million available as the overall effect of the change will alter from year to year. Therefore, the hon. Member for Bolton, West is mistaken to believe that she has a source of finance—it is not available.
I admit that on the nil-cost constraint within which I must operate, the rationalisation of the supplementary benefits scheme with the current rent rebate and allowance scheme means that losers will be produced. I repeat, however, that no one with an income below the needs allowance will lose. Poorer claimants will not lose benefit. Indeed, 750, 000 pensioners below the needs allowance and 220, 000 just above it will gain by an average of £1 per week. That is an important consideration. The poorer will benefit from the changes.
Secondly, the losses that the hon. Member for Bolton, West mentioned are in proportion to income. The higher the income, the greater the loss. Thus, in 1981 terms, married pensioners receiving rent and rate rebates with incomes of more than £60 per week will lose 25p per week, and those earning more than £70 per week will lose 75p per week.

Mr. Race: What is the average wage?

Mr. Rossi: Nearly half of the losers will lose 25p or less per week.
The changes are necessary so that the two existing schemes can be more easily harmonised. Those receiving supplementary benefit can be brought into the rebate scheme comparatively easily. Passporting arrangements, whereby the DHSS supplementary benefit officer certifies that a supplementary benefit claimant is entitled to 100 per cent. assistance with rent and rates, will ensure that claimants receive as much assistance as they do under the present scheme.
The real problem, as the hon. Member for Bolton, West said, arises when people move from one scheme to the other. There is a problem in ensuring that they do not lose weekly benefits. The topping-up arrangements ensure that supplementary benefits claimants floated off benefit will receive at least as much weekly benefit as now. As the great majority of topping-up cases will be poor pensioners, we introduced the higher tapers for pensioners below the needs allowance and added 75p to the needs allowance to reduce the number of topping-up cases.
Those improvements cost £70 million and have to be funded from within the scheme. It seemed that the fairest way to find the money was to obtain it from people with the highest incomes relative to their need. The cost of the improvement that I have mentioned was met by increasing rent and rate tapers for those above the needs allowance from the current 17 per cent. and 6 per cent. to 21 per cent. and 7 per cent respectively.
The right hon. Lady's proposal may not have quite the consequences that she expects. The rate rebate taper change wipes out a significant proportion of losers, but in a sense it is illusory. If a claimant is on rate rebate only, thanks to this proposal he will have no losses even if his income is £50 or more above the needs allowance, but if he is on both rent and rate rebate he will still lose as compared with the present position even if his income is only £1 above the needs allowance. I am not sure that hon. Lady intended to protect owner-occupiers and tenants paying low rents, who will not qualify for rent assistance, while leaving poor tenants to pay higher rents with losses, but that is the consequence of the hon. Lady's proposal.
We believe that the best way to help poor working families remains the family income supplement. That is the best form of direct help for this group's needs. Housing benefit can only help towards part of their housing costs. Under new clause 7, the money is shared with many thousands of others. The help is not targeted. I am using the £24 million that I have been able to find to give the greatest help to the poorest, who are my target group. Moreover, I put the numbers game aside to help topping-up claimants and my proposals do not go beyond the resources at my disposal. By contrast, the Opposition are overspending, and they are not even giving the greatest help to the poorest claimants in their target group. The Government's proposals, therefore, make far greater sense than new clause 7.
Again, the hon. Member for Stockport, North may not have appreciated some of the consequences of his new clause 8. It will complicate administration and it will give many supplementary benefit claimants less help with their rent and rates than they will receive under the Government's proposal or than they now receive. I am sure that the hon. Gentleman did not envisage that consequence in tabling the new clause. I shall try to explain why this would happen.
Under the Government's housing benefits proposals, the level of rent rebates and allowances for claimants on supplementary benefit will be worked out as at present. The claimant's resources will be considered in relation to the appropriate needs allowance. If his income equals the needs allowance, the claimant will receive a 60 per cent. rebate. If it is more than the needs allowance, the rebate will be reduced by a proportion of the excess, using the tapers that we have discussed. If his income is less than the needs allowance, the rebate will be increased by a proportion of the shortfall.
The hon. Gentleman proposes that supplementary benefit claimants be treated in the same way. Housing assistance for those entitled to the long-term scale rate would be worked out using the 50 per cent. and 20 per cent. tapers. For others, which by implication includes those on the ordinary scale rate, the 25 per cent. and 8 per cent. tapers would apply.
The Government take a different approach. I hope that when the hon. Gentleman has reflected on What I have said he will appreciate that we have taken the right course. Instead of the 100 per cent. passporting and automatic payment of all housing costs to those on supplemenatary benefit, he would subject them to the needs allowance and the tapers and in terms they would thereby lose. I am sure that that was not his intention, but that would he the consequence of his new clause. I must therefore invite the House to reject it.
For the reasons that I have given, therefore, neither of the new clauses produces the results intended by the Opposition. In many ways, they would disadvantage the people whom they seek to help. They would also unnecessarily increase public expenditure by distributing many millions of pounds to people whom they did not set out to help in the first place. I therefore ask the House to reject both new clauses.

Mrs. Ann Taylor: The Minister's reply is absolutely incredible. It is matched only by the lack of interest on the Conservative Benches. It is remarkable that not one Conservative Back Bencher has shown any interest in the debate. Had we been discussing changes in mortgage tax relief or capital gains tax, I am sure that the Conservative Benches would have been full and Conservative Members would have shown an interest. Clearly they are not at all interested in the 2 million households which will lose under the Government's proposals.
The Minister acknowledged that our objective was to halve the number of losers under the scheme. We could have tabled further proposals to remove all losers and to protect all those whom the Government are attacking. Knowing that the Minister was intent on operating on a nil-cost basis, however, we were somewhat constrained in our proposals. We therefore put forward realistic options, which the Minister should have considered more seriously rather than simply reading out the brief prepared for him.
The Minister agreed that our costings were correct. He simply refused to try to find the money for this better scheme and gave spurious reasons for rejecting it. He said that the Government decide their own priorities and that no extra money can be found for housing benefit. That comes from the same Government who defined their own priorities and removed housing as an element to be considered in the retail price index for the uprating of supplementary benefit. We do not believe that the Minister has to be constrained by a nil-cost scheme, so it is ridiculous for him to say that we could not produce a better nil-cost scheme. We have shown him where to find the money to help the many people who need help under the scheme.
The Minister made certain statements with which we cannot possibly agree. He said, for example, that no one with an income below the needs allowance would lose under the new proposals. That is not necessarily so. He assumes that the topping-up system will work perfectly in every case. As anyone who has examined the scheme knows, he has not yet shown that topping up will work and that all those entitled to extra benefit will know about it and will know the amount that they will receive.
There is a further problem for people with incomes below the needs allowance, because those with incomes greater than the supplementary benefit scale rates who would have been transferred to the long-term supplementary benefit scale rates will lose that in the future. Those people will therefore lose and they are not protected by what the Minister has said.
The Minister also spoke, especially towards the end of his speech, as though tenants did not pay rates as well, because he quibbled about the fact that our proposals would help a large number of people by means of rate

rebates. That is deliberate on our part, because the Minister intends to penalise those people so that they will lose in any case.
The Minister did not mention—and I did not mention this earlier—the effect of dropping the high rent scheme, which is one way in which he intends to provide the extra 75p needs allowance for pensioners. The Minister brags about helping pensioners under the scheme. I remind him that there will still be 1 million pensioner losers under the scheme even after the needs allowance to pensioners has been increased. The Minister should make that clear rather than pretending that he has done something for all pensioners. In dropping the high rents scheme, the Minister has done very little indeed for families. By dropping the high rents scheme the Minister has, in fact—

Mr. Rossi: I do not want a wrong impression to be created outside the House. There is an existing high rent scheme, which will be kept. What the hon. Member was referring to was the possible addition to that which was in the consultative document. I did not address my remarks to that because the hon. Member did not speak to it earlier. What we decided to do was to use the money in a far better way by helping the pensioners and the poorer off.

Mrs. Taylor: The Minister knows that we discussed in Committee the fact that he was dropping his new high rent scheme—perhaps I should refer to it in those terms—the scheme which was intent on helping those people who are paying a high rent for their accommodation. But by dropping his new high rent scheme the Minister has created a situation where there will be more potential family losers because the high rent scheme would have helped some of those families who would have got extra benefit and who will now not get that extra benefit because the scheme has been dropped. May I remind the Minister—

Mr. Rossi: It is perfectly true that if we had introduced the new high rent scheme it might have had the effect of avoiding some 120, 000 losers. But the way in which we have deployed the money has instead meant that we have avoided 300, 000 losers. That is why I said that we had found a better way of using the money than by introducing the new high rent scheme which we contemplated for a short period but then rejected because we decided that it was not as satisfactory as we had hoped it might be.

Mrs. Taylor: The Minister's whole scheme is not as satisfactory as many people hoped it might be. When the Minister talks about avoiding 120, 000 losers by the introduction of a new high rent scheme, the Minister has to acknowledge that by dropping that new high rent scheme he is creating another 120, 000 losers.
The people I want just to say a word about are those families who will lose because their numbers will increase because of what the Minister is doing by dropping the new high rent scheme. On the Minister's own figures, there are 530, 000 families with children who will lose under this scheme. There are also 490, 000 families without children who will lose. As the Minister has acknowledged by what he has just said, there are now 120, 000 more losers because of the dropping of the new high rent scheme. All these people are non-pensioners.
It is worth remembering that the people who will lose most under the Government's scheme are those who are


earners and those families with dependent children. As I said initially when I was speaking specifically to new clause 7, by these proposals the Minister is making the poverty trap worse by 5p in the pound on the (family's income above the needs allowance. We think that the Minister should avoid making the poverty trap worse. We know that Tory Members have frequently complained about the poverty trap. We have given the Minister a way out. We have made constructive suggestions on how he can minimise that poverty trap situation on the tapers, and Labour Members will be very disappointed indeed by the Minister's response. We must divide the House on new clause 7.

Mr. Race: rose—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. I have only just taken the Chair but my impression is that I saw the hon. Member's name on the annunciator earlier.

Mr. Race: Yes, Mr. Deputy Speaker. By leave of the House, I just want to make it absolutely clear to those outside whom the Minister is so concerned about that the people he is describing as losers under this scheme are those people on half average earnings. The people whom he described as losing 20p or 25p a week are those people earning about £70 a week. National average earnings at the present time are around £120 to £125 a week. In London, the area that the Minister and I both represent, the average is £140 a week for male manual workers. Therefore, what he is saying is that the people on half average earnings are being paid too much now in housing benefit. That is the consequence of the scheme that he is introducing. That is why it is disgraceful and that is why we shall vote against it.

Question put,  That the clause be read a Second time:—

The House divided: Ayes 143, Noes 200.

Division No. 102]
[6.35 pm


AYES


Allaun, Frank
Douglas, Dick


Archer, Rt Hon Peter
Douglas-Mann, Bruce


Ashton, Joe
Dubs, Alfred


Bennett, Andrew(St'kp't N)
Dunlop, John


Booth, Rt Hon Albert
Dunwoody, Hon Mrs G.


Boothroyd, Miss Betty
Eastham, Ken


Bradley, Tom
Edwards, R. (W'hampt'n S E)


Brown, Hugh D. (Provan)
Ellis, R.(NE D'bysh're)


Brown, Ronald W. (H'ckn'y S)
English, Michael


Buchan, Norman
Evans, Ioan (Aberdare)


Callaghan, Jim (Midd't'n&amp;P)
Evans, John (Newton)


Campbell-Savours, Dale
Ewing, Harry


Carter-Jones, Lewis
Field, Frank


Cartwright, John
Fitch, Alan


Clark, Dr David (S Shields)
Fletcher, Ted (Darlington)


Cocks, Rt Hon M. (B'stol S)
Ford, Ben


Coleman, Donald
Foulkes, George


Concannon, Rt Hon J. D.
Freud, Clement


Cook, Robin F.
Garrett, John (Norwich S)


Cowans, Harry
Golding, John


Craigen, J.M.(G'gow, M'hill)
Graham, Ted


Crowther, Stan
Grant, George(Morpeth)


Cryer, Bob
Hamilton, W. W. (C'tral Fife)


Cunliffe, Lawrence
Harrison, Rt Hon Walter


Cunningham, G.(Islington S)
Hart, Rt Hon Dame Judith


Cunningham, Dr J. (W'h'n)
Haynes, Frank


Dalyell, Tam
Home Robertson, John


Davidson, Arthur
Homewood, William


Davis, Terry (B'ham, Stechf'd)
Hooley, Frank


Deakins, Eric
Howell, Rt Hon D.


Dean, Joseph (Leeds West)
Howells, Geraint


Dixon, Donald
Hoyle, Douglas


Dormand, Jack
Hughes, Robert (Aberdeen N)





Hughes, Roy (Newport)
Race, Reg


Jay, Rt Hon Douglas
Radice, Giles


John, Brynmor
Richardson, Jo


Jones, Rt Hon Alec (Rh'dda)
Roberts, Albert(Normanton)


Jones, Barry (East Flint)
Robertson, George


Kerr, Russell
Robinson, G. (Coventry NW)


Kilfedder, James A.
Rooker, J. W.


Kilroy-Silk, Robert
Ross, Ernest (Dundee West)


Lamond, James
Rowlands, Ted


Leighton, Ronald
Sandelson, Neville


Lewis, Ron (Carlisle)
Sever, John


Litherland, Robert
Sheerman, Barry


Mabon, Rt Hon Dr J. Dickson
Short, Mrs Renée


McCartney, Hugh
Silkin, Rt Hon J. (Deptford)


McDonald, Dr Oonagh
Silverman, Julius


McElhone, Frank
Skinner, Dennis


McGuire, Michael(Ince)
Smith, Cyril(Rochdale)


McKay, Allen(Penistone)
Spearing, Nigel


McKelvey, William
Spriggs, Leslie


MacKenzie, Rt Hon Gregor
Stoddart, David


McNamara, Kevin
Stott, Roger


McWilliam, John
Summerskill, Hon Dr Shirley


Marks, Kenneth
Taylor, Mrs Ann (Bolton W)


Marshall, Dr Edmund (Goole)
Thomas, Dafydd (Merioneth)


Marshall, Jim (Leicester S)
Thomas, Dr R.(Carmarthen)


Martin, M(G'gowS'burn)
Varley, Rt Hon Eric G.


Mason, Rt Hon Roy
Wainwright, E.(Dearne V)


Maynard, Miss Joan
Wainwright, R.(Colne V)


Mikardo, Ian
Welsh, Michael


Mitchell, R. C. (Soton Itchen)
White, Frank R.


Morris, Rt Hon A. (W'shawe)
Whitlock, William


Morris, Rt Hon C. (O'shaw)
Williams, Rt Hon A.(S'sea W)


Morris, Rt Hon J. (Aberavon)
Wilson, Gordon(Dundee E)


Morton, George
Winnick, David


Oakes, Rt Hon Gordon
Woodall, Alec


O'Neill, Martin
Wright, Sheila


Park, George



Parker, John
Tellers for the Ayes:


Parry, Robert
Mr. James Hamilton and


Pitt, William Henry
Mr. James Tinn.


Powell, Raymond(Ogmore)





NOES


Alexander, Richard
Cope, John


Alison, Rt Hon Michael
Costain, Sir Albert


Ancram, Michael
Cranborne, Viscount


Arnold, Tom
Dean, Paul (North Somerset)


Aspinwall, Jack
Dickens, Geoffrey


Atkins, Robert(Preston N)
Dorrell, Stephen


Atkinson, David(B'm'th, E)
Douglas-Hamilton, Lord J.


Beaumont-Dark, Anthony
Dover, Denshore


Bendall, Vivian
Dunn, Robert(Dartford)


Benyon, Thomas(A'don)
Edwards, Rt Hon N. (P'broke)


Berry, Hon Anthony
Eggar, Tim


Best, Keith
Eyre, Reginald


Biffen, Rt Hon John
Fairgrieve, Sir Russell


Biggs-Davison, Sir John
Faith, Mrs Sheila


Blackburn, John
Fell, Sir Anthony


Boscawen, Hon Robert
Fisher, Sir Nigel


Bottomley, Peter (W'wich W)
Fletcher, A. (Ed'nb'gh N)


Bright, Graham
Fletcher-Cooke, Sir Charles


Brinton, Tim
Fookes, Miss Janet


Brooke, Hon Peter
Forman, Nigel


Brotherton, Michael
Fowler, Rt Hon Norman


Brown, Michael(Brigg&amp;Sc'n)
Fox, Marcus


Browne, John(Winchester)
Fry, Peter


Buck, Antony
Gardiner, George(Reigate)


Budgen, Nick
Glyn, Dr Alan


Burden, Sir Frederick
Goodlad, Alastair


Butcher, john
Gorst, John


Cadbury, Jocelyn
Gow, Ian


Carlisle, John(Luton West)
Gray, Hamish


Carlisle, Kenneth(Lincoln)
Greenway, Harry


Chapman, Sydney
Griffiths, Peter Portsm'th N)


Churchill, W.S.
Grist, Ian


Clark, Hon A. (Plym'th, S'n)
Gummer, John Selwyn


Clark, Sir W. (Croydon S)
Hamilton, Hon A.


Clarke, Kenneth(Rushcliffe)
Hamilton, Michael(Salisbury)


Clegg, Sir Walter
Haselhurst, Alan


Cockeram, Eric
Hawksley, Warren






Hayhoe, Barney
Pawsey, James


Heddle, John
Percival, Sir Ian


Henderson, Barry
Peyton, Rt Hon John


Hicks, Robert
Pink, R.Bonner


Higgins, Rt Hon Terence L.
Pollock, Alexander


Hill, James
Porter, Barry


Hogg, Hon Douglas(Gr'th'm)
Prentice, Rt Hon Reg


Holland, Philip(Carlton)
Proctor, K. Harvey


Hooson, Tom
Rathbone, Tim


Howe, Rt Hon Sir Geoffrey
Rees-Davies, W. R.


Hunt, John(Ravensbourne)
Renton, Tim


Hurd, Rt Hon Douglas
Rhodes James, Robert


Jessel, Toby
Rhys Williams, Sir Brandon


Johnson Smith, Geoffrey
Ridley, Hon Nicholas


Jopling, Rt Hon Michael
Rifkind, Malcolm


Kaberry, Sir Donald
Roberts, M. (Cardiff NW)


Kellett-Bowman, Mrs Elaine
Roberts, Wyn (Conway)


Knox, David
Rossi, Hugh


Lang, Ian
Sainsbury, Hon Timothy


Latham, Michael
Shaw, Giles (Pudsey)


Lawrence, Ivan
Shaw, Michael(Scarborough)


Lawson, Rt Hon Nigel
Shelton, William(Streatham)


Lee, John
Shepherd, Colin(Hereford)


Lester, Jim (Beeston)
Shepherd, Richard


Lewis, Kenneth (Rutland)
Silvester, Fred


Lloyd, Peter(Fareham)
Skeet, T. H. H.


Lyell, Nicholas
Speller, Tony


McCrindle, Robert
Spicer, Jim (West Dorset)


Macfarlane, Neil
Spicer, Michael (S Worcs)


MacGregor, John
Sproat, lain


Macmillan, Rt Hon M.
Stainton, Keith


McNair-Wilson, P. (New F'st)
Stanbrook, Ivor


Major, John
Stanley, John


Marland, Paul
Stevens, Martin


Marlow, Antony
Stradling Thomas, J.


Marten, Rt Hon Neil
Taylor, Teddy (S'end E)


Mather, Carol
Tebbit, Rt Hon Norman


Maude, Rt Hon Sir Angus
Temple-Morris, Peter


Mawby, Ray
Thomas, Rt Hon Peter


Mawhinney, Dr Brian
Thompson, Donald


Maxwell-Hyslop, Robin
Thorne, Neil(llford South)


Mayhew, Patrick
Thornton, Malcolm


Mellor, David
Townend, John(Bridlington)


Meyer, Sir Anthony
Townsend, CyrilD, (B'heath)


Miller, Hal(B'grove)
Trippier, David


Mills, Iain(Meriden)
Viggers, Peter


Mills, Peter (West Devon)
Waddington, David


Miscampbell, Norman
Walker-Smith, Rt Hon Sir D.


Moate, Roger
Waller, Gary


Monro, Sir Hector
Ward, John


Montgomery, Fergus
Warren, Kenneth


Moore, John
Watson, John


Morgan, Geraint
Wells, Bowen


Morris, M. (N'hampton S)
Wells, John(Maidstone)


Morrison, Hon C. (Devizes)
Wheeler, John


Morrison, Hon P. (Chester)
Wickenden, Keith


Murphy, Christopher
Wilkinson, John


Neale, Gerrard
Winterton, Nicholas


Nelson, Anthony
Wolfson, Mark


Neubert, Michael
Young, Sir George(Acton)


Newton, Tony
Younger, Rt Hon George


Page, John (Harrow, West)



Page, Richard (SW Herts)
Tellers for the Noes:


Parris, Matthew
Mr. Tristan Garel-Jones and


Patten, Christopher(Bath)
Mr. David Hunt.

Question accordingly negatived.

New Clause 12

SOCIAL SECURITY ADVISORY COMMITTEE

'The Secretary of State shall refer to the Social Security Advisory Committee the question of how to administer payments so as to protect recipients and potential recipients of supplementary benefits who will lose by the introduction of the statutory schemes and will lay before Parliament its findings and recommendations thereto.'.—[Mr. Rooker.]

Brought up, and read the First time.

Mr. Rooker: I beg to move, That the clause be read a Second time.
This is a catch-all new clause for its gives hon. Members the opportunity to raise some of the points contained in new clauses 9, 10 and 11 that have not been selected. Earlier in today's proceedings, the Minister alluded to matters that we shall now discuss when he referred to those who will lose the right to supplementary benefit because the raising of the benefit allowances or the needs allowance will be less than the rate of inflation owing to the removal of the housing factor. They could find themselves with a little too much income and resources to obtain supplementary benefit that they would have received but for the passing of the Bill.
People in those circumstances, who would have obtained supplementary benefit before the passing of the Bill, would therefore have obtained automatically the passport benefits—the right to exceptional needs payments to single payments for various items, to possible assistance with heavy fuel bills, subject to the vagaries of the weather, and to free prescriptions—without having to go through another means test.
The Minister said that they could apply quite separately. Some of them will be entitled to assistance with prescription charges because of their income level. None of them, so far as I am aware, will be entitled to single needs payments because they will not be within the coverage of the supplementary benefits scheme in the first place.
Basically, we want to know why the Minister will not accept the new clause. Perhaps I am being too pessimistic, because he has not said a word yet, but I have got used to the Minister's dismissing so far this evening everything that the Opposition have put up. This new clause will not cost the Government or the taxpayer a penny because its basic purpose is to provide initial information to Parliament about these people.
I assume that the Government have done their calculations about the numbers of people affected. That must be so because otherwise the Minister could not have made the statements he made in our earlier debates about the people who are so affected and who can then apply separately for assistance with prescription charges.
We have already talked this evening about people with an income of £60 per week. That is not a very princely sum. It is well under half the current average earnings, based on the latest Government figure of £150 a week. People on £60 a week will lose, the Minister said, when the Bill becomes law.
Given that it has such a bad impact on the low paid, we wish to ask the social security advisory committee to look at how certain people could be protected. I do not think it was the Government's intention—if I am wrong the Minister can correct me—to deprive certain low-income families of the right to help with prescription charges, the right to assistance with fuel, under the existing schemes. I am asking for no new money, no changes in the schemes, but just for their rights under the existing schemes laid down and approved by this House. I do not think this was the Government's original intention, because along the way they have made various changes—0·5 per cent. here, 1 per cent. there, tapers here, different angles on the graphs, all of which have the effect of making things worse.
We therefore hope that the Minister will look favourably upon this new clause. I imagine that the social


security advisory committee would want to take on the task involved in the clause. I have not discussed it with the chairman and I do not think that any of my hon. Friends have discussed the detail, but, looking at the work of the committee since it was set up, the nature of the legislation that has been passed by the House and the comments that the SSAC has made so far, I think it will want to get involved in this and will want to find a way of advising the Government how to administer this new scheme from April 1983 so that the low-paid do not lose.
I hope that the Minister will have the grace to accept the clause. It may prevent my hon. Friends discussing the matter for longer than they otherwise would. I ask the Minister to be a little more sympathetic to my hon. Friends than he was in the last debate, because we are under no time constraint tonight. I see no danger of any Conservative Members taking part in the debate because the debate is essentially between the Minister and my hon. Friends. I do not think that the Minister ought to be too concerned about giving way to my hon. Friends, because they are seeking only to elicit information. If he does not have the information, he has only to say so. This would make the debates a little more fruitful. In fact, it would allow my hon. Friends to make their speeches and listen to the Minister respond to them, rather than having to entice the Minister to get up immediately I sit down and then make their speeches afterwards.

Mr. Andrew F. Bennett: Does my hon. Friend accept that when the Minister is as arrogant and incompetent as he was in his last reply he tempts Opposition Back Benchers to call for a vote on the last five Government new clauses and keep the Minister here for an extra one and a half hours?

Mr. Rooker: If my hon. Friend does that he will keep me here for an extra hour and a half.
The Minister can see that harsh words, the clear implication being that he was not even prepared to listen to the question of my hon. Friend the Member for Stockport, North (Mr. Bennett), do not make for a fruitful debate. Labour Members are constantly chastised by the Conservatives who maintain that we want to move away from the concept of parliamentary democracy, yet here we have a Tory Minister who does not want even to debate matters in the Chamber of the House of Commons. It is no use the Minister shaking his head at that because that is what happened in our last debate.

Mr. Rossi: rose—

Mr. Rooker: I must give way after what I have just said. All the Minister has to do is to enter into the spirit of this debating Chamber, as he did in Committee, and when he does not know the answers to be big enough to say so.

Mr. Rossi: The hon. Gentleman is really making a mountain out of a molehill. I listened very carefully to the speech of the hon. Member for Stockport, North (Mr. Bennett) and I did not interrupt him. Then I sought to make my points, and he sought to interrupt me at an inconvenient point, when I could very easily have lost the thread of my remarks. Therefore, I refused to give way to him, but he would have had an opportunity later to intervene or, with the leave of the Chair—and this has happened already this evening—to make a second speech.

Mr. Rooker: It would only have been necessary for the Minister to keep his finger on the line he had reached in the brief that he was reading and then to return to it. If I remember correctly, because I was watching the Minister, when my hon. Friend the Member for Wood Green (Mr. Race) sought the leave of the House to make a further small contribution—

Mr. Deputy Speaker: Order. I am finding it a little difficult to relate these remarks to the new clause.

Mr. Rooker: I am attempting, Mr. Deputy Speaker, to set the framework so that we may debate the new clause rather than get into the procedural mess that will develop if Minister is not co-operative. I have asked all the questions I intend to ask at this juncture. It is quite clear that the Minister must have some answers to the questions, otherwise he could not possibly have made his comments earlier this evening. I shall wait and listen to his answers before I decide whether to seek to catch your eye again, Mr. Deputy Speaker.

Mr. Andrew F. Bennett: I have several new clauses down tonight and there is obviously not much hope of the Government's accepting any of them. It certainly seems to me, however, that this is one that the Minister could make it absolutely clear he accepts. We have a major problem with this part of the Bill because clause 26 and the two or three other clauses that go with it are simply enabling legislation. In parliamentary terms they really say that the Minister can do what he likes.
It surprises me that when the Opposition argue the case both here and outside for general enabling measures so many Conservatives claim that it is anti-democratic and all sorts of things are wrong with it. Yet it is Conservative Ministers who time and again come to the House with general enabling measures. That is really what this is and what is important is how far we retain some form of scrutiny of the new housing benefit system into the future.
One of the ways we can do this is by making sure that the social security advisory committee monitors it carefully and makes regular reports to the House or it. Then at least we shall have some opportunity to debate the way in which the Minister uses the general powers given to him by clause 26.
In Committee we expressed considerable concern about how the new system would be brought into force. It is going to be brought into force by statutory instruments. We want assurances that those instruments will be adequately debated. Amendments were made in Committee providing that when the regulations are first introduced they will have to be laid before the House and be the subject of a minimum hour-and-a-half debate, but anyone who has examined the matter will realise that that will not be satisfactory. We need at least a day's debate—and an informed day's debate. It would be ideal if the social security advisory committee saw the regulations first and commented on them before the House examined them.
7 pm
There is a whole series of areas in which we want to know what the regulations will do. One that concerns me particularly is water service charges. The Minister assured us in Committee that those on existing supplementary benefit rates would have what most people know as the old water rate paid 100 per cent., but those who are just above


the supplementary benefit level will receive no assistance. They will have to meet the whole cost, and that upsets many of my constituents. They are entitled to rebates on their general rates, but they are entitled to no rebate on their water service charges. Many complain that they now have to pay more for their water charges than they pay for their general rates, because the rates are rebated. This is a question that should have been put to the advisory committee. I am sure that it would say that it is illogical not to give those on low incomes any help with their water charges.
What is particularly illogical is that the Government have achieved no uniform pattern over the whole United Kingdom. In Scotland people pay a water rate which covers merely water, and not sewerage, and they pay the local authority for the sewerage. The authority can give a rebate on the part of the sewerage charge, so those in Scotland are fortunate in that they receive more help with their water and sewerage charges than those in England and Wales do. I am not sure what the position in Northern Ireland is.

Mr. James Molyneaux: It is more complicated.

Mr. Bennett: If the Government 'are talking about a national scheme of assistance, it is illogical to give different levels of assistance in Scotland. The question should be referred to the advisory committee. I believe that the committee would come out firmly in favour of extending assistance, via this scheme, to those who are just above the supplementary benefit level and who have to pay high water service charges.
My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) discussed the passporting effect. Traditionally those on supplementary benefit have been able to claim all sorts of other benefits merely because they were on supplementary benefit. It was normally possible for them to show their supplementary benefit book as proof of entitlement, as the passport to the other benefits.
With the combined new scheme some people will no longer receive any supplementary benefit. What form will the passport take in future to enable people to establish very simply that they are entitled to assistance—whether with prescription charges, free school meals, or travelling expenses for visiting people in hospital or in prison? What will be the position over dental charges for those who used to be on supplementary benefit but who will now be on the combined housing benefit and will not have a supplementary benefit order book? If the Minister cannot tell us, we shall want the advisory committee to examine the matter.
What will happen to those who come into the new scheme with existing debts? Sadly, many people get into arrears with their rent. Someone asks them what they will do to pay the arrears, and then it is discovered that they were entitled to various forms of assistance. They often go on to rebate or supplementary benefit, which eases their problems in meeting their bills. Under the present provision, it has normally been possible to make deductions from supplementary benefit, though I gather that it is not normally possible to make deductions from national insurance benefits.
I hope that the Minster can assure us that in future small deductions from supplementary benefit can be made in

order to start paying off arrears of rents or rates when those are outstanding when someone enters the scheme. If it is not possible, the advisory committee should examine the matter. When one must plead with the housing authority not to evict someone, often all that can be said is that in future the rent must be paid direct, and he must pay off 50p a week or so off the arrears. I hope that the Minister will say that that will be possible in the future.
The whole Bill came about as a result of the comment of the Supplementary Benefits Commission that the whole system was illogical and far too complicated and that it needed reform. The commission put forward many arguments for integration and for producing one system, but it made the point that many people would have a little less money in their pockets. It said that it realised that that was a disadvantage, but also said that there would be some administrative and other advantages. It suggested that the disadvantage could be left to one side, because it was outweighed by the advantages. I am not certain that that is true.
It seems to me that by the new scheme we shall effectively reduce the amount that many people will have in their pockets each week. Admittedly, at present they have the money in their pockets only because they are on the way to paying it to the local authority in the form of rent. Many of my constituents who are paying £15 or £20 a week in rent and rates have that money for a fortnight, because they pay it to the housing department fortnightly rather than weekly. That means that they have the use of the money for a week before they pay it over. That is very important to some of my constituents, because they do not have the advantage of cheques or plastic money to enable them to buy things before they have the money to pay for them. They have to live in a cash society.
One of my constituents can regularly go to a supermarket some distance from her home and do her shopping fortnightly, using her rent money in the first week. It gives her the necessary amount of cash. Because she goes to the supermarket to buy her main shopping for a fortnight she can buy things that much cheaper than at the corner shop. She can afford her bus fare there and a share of a taxi coming home. The next week when she receives her supplementary benefit she can use it not for food but to pay the rent. She never gets into arrears and she has the advantage of that extra cash for a week. It might be said that the system at present works as the people's bank, giving people a little money that they can use.
The present system also gives people the insurance, if things go desperately wrong, of being able to go a week or a fortnight in arrears with their rent. I do not believe that they should go in arrears, but anyone who wants to criticise someone who goes into rent or rate arrears should live on those income levels for several years to know what the problems really are.
I believe that in the Bill we are taking away that option. Few of my constituents want the option; they do not want to use it, because they dread getting into arrears. The choices might be having the gas or electricity cut off or not having enough food for their children. If a child has a disastrous accident and comes home from school having ripped a pair of trousers and it is a question whether he gets to school the following day, they may well be making the right choice in spending the rent money on meeting such a crisis and going a day or two in arrears with the rent rather than facing up to the other consequences.
As a result of this measure, we are taking away cash; we are taking choices and options from people who will be in receipt of the new housing benefit, because it will be paid direct to the local authority. Individuals will never receive it, so they will lose that flexibility. That may have considerable consequences for those on benefits and it is a major aspect that the social security advisory committee ought to be considering after the first six months, to understand the consequences and appreciate what the Government ought to be doing about them. It may be that the Government ought to be raising the general level of benefits so that claimants have that little extra margin; they are not so tightly tied down by the money they have that they cannot have anything on one side to meet an emergency.
The proposals put forward by the Supplementary Benefits Commission stated that although there might be disadvantages, such as reducing flexibility and the amount of money that claimants had in their hands at any time, it had so many other advantages that it was only fair, once the scheme had operated for six months, to reconsider it and ask whether it was working and causing much extra hardship.
What are the scheme's implications for those unable to pay fuel bills? Does it mean that there are greater fuel debts and has it helped local authorities to reduce their problems of debt collection? They are major issues and I hope that the Minister will make it clear that he expects the social security advisory committee to consider all these questions as the scheme comes into operation. If the reports it produces suggest that the problem I have mentioned is major, I hope that the Government will do something to act on it a little more quickly than they have done on some of the other areas where the Committee has been critical of them and where they have been slow to act.

Mr. Race: I shall make only one brief comment on new clause 12 and its interrelationship with new clause 14. As my hon. Friend the Member for Stockport, North (Mr. Bennett) knows, there is a relationship between those clauses.
The relationship is that if the social security advisory committee, which can, of course, consider whatever it likes, has information from local authorities on the way that a scheme is working and whether the administrative arrangements made by the Government and implemented by them are working effectively to the benefit of claimants, it will be unable to get information from beneficiaries. Because of the absence of an appeal system, there would not be a direct way that the SSAC could monitor the sort of complaints that people were making through an appeal system against a local authority refusing to do something.
That relationship represents a major undermining of the SSAC's position. How is it to know the claimant's precise objections towards the system and the way it is being administered if there is no appeal system by which he can get advice and redress when a local authority has done something against his interests? I would be interested to know why the Minister believes that the SSAC will be able to monitor that aspect of the new housing benefit scheme. Will it be unable to undertake survey or research work with local authorities? Will it do that on a national scale? That is important if it is to preserve its credibility. It is essential

that the information it is given is from a national scale and not from one or two selected local authorities whose practices may be completely out of line with others.
Therefore, I hope that the Minister will support new clauses 12. and 14 because of the need to preserve the information that the SSAC receives and to preserve the gains that are supposed to flow from this scheme. We are debating this issue only because of the alleged benefits that it will have for claimants. If that system does not work for the claimants and does not mean that they must go to fewer offices, fill in fewer forms and have less hassle. there is no point the House of Commons voting it through.

Mr. Rossi: Opposition Members raised many matters that they wished the SSAC to consider. I am sure, once it has assumed responsibility, that it will want to consider those matters among others relating to the housing benefit scheme. Indeed, the Government will be anxious to receive its advice on all aspects of housing benefit. However, this new clause requires, in terms, the Secretary of State to ask the SSAC to consider certain matters—the protection of supplementary benefit recipients who lose from the introduction of the housing benefit payments, and for those to be reported and for the report's findings to be put before Parliament. This is a little disparaging to the social security advisory committee, 
That committee is an independent body set up to advise the Secretary of State across the whole range of social security matters. Its chairman, Sir Arthur Armitage, and its members are experienced, and I am sure that they will take the responsibility for housing benefits seriously. They will wish to consider all the relevant matters, and are the best placed to decide, in relation to their other priorities, the aspects of the scheme requiring particular attention. Therefore, it is not for the Secretary of State to ask them to do anything; they are independent and must decide matters for themselves. I have no doubt that these important matters will come within the purview of their consideration.
Concern was expressed for supplementary benefit recipients who lose as a result of the scheme's introduction. They will be beneficiaries floated off supplementary benefit by the new scheme. Those who remain on it obviously get passported 100 per cent. for their rent, rates and water rates and, therefore, do not lose in any way. Who will be floated off? It will be either those who became entitled to topping up because they are losers or those who gain weekly benefit. However, both categories might run the risk of losing entitlement to ancillary benefit. For example, single payments and free benefits under the National Health Service. The Opposition specifically referred to these matters.
We intend to provide a topping-up payment in the regulations and procedures that we shall lay down. That will be a legal supplementary benefit, treated as such, and serve as a passport for the whole range of benefits, in the same way as ordinary supplementary benefit does now. Therefore, the loser's position is fully protected. According to our estimates, gainers number about 73, 000.

Mr. Andrew F. Bennett: The Minister said that there will be passports. However, what will the individual use as a passport, to serve as a supplementary benefit book does at the moment? When he shows someone a supplementary benefit book, he is accepted as being on


supplementary benefit. What will he have to show that he is getting the housing benefit and is entitled to other passporting benefits?

Mr. Rossi: He will receive a payment order which will show that he is receiving topping up, a supplementary benefit. I assure the hon. Gentleman that the documentation will be available in some form to people who are entitled to receive the other ancillary benefits, which are the entitlement of all people on supplementary benefits.

Mr. Field: Many hon. Members have to advise their constituents about whether to opt for supplementary benefits or the rebate scheme. We have to decide whether being better off in the short-term is offset by any long-term gains through being on the other benefit. We were worried in an earlier debate today that if the needs allowance is not kept in line with pension arrangements in future it will be even more difficult for us to advise our constituents as to the best deal. Up to now, the needs allowance has been kept in line with increases in the old-age pension. One of the undertakings that the Minister failed to give when he replied to that earlier debate was that it would be kept in line in future. If it is kept in line, it will help us to deal with complicated decisions as to the best buy between the two benefits. Sometimes people opt in the short-term to be worse off on one benefit because they know that in the long run they will be substantially better off.

Mr. Rossi: I accept what the hon. Gentleman says. There is a dilemma at present. It is difficult to know whether to go to the town hall and ask for a rent or rate rebate or to apply for supplementary benefit. One can lose financially by making the wrong choice. The object in bringing forward this new scheme is to obviate the need to make that choice. If a person is entitled to supplementary benefit, he does not have to worry about whether he should claim a rent rebate or a rate rebate, because he will automatically get it. If people are supplementary benefit recipients, they will get a full rebate. They do not have to make a choice.
People who do not receive supplementary benefit have no choice. They apply straight away for the rent and rate rebates, and they are then paid in accordance with the operation of the needs allowance or the tapers in relation to their income, their dependants, and so on. That is how the scheme will operate. We put forward the scheme because of the great simplification that it will bring. It will be much easier for the hon. Gentleman's constituents, who will no longer be faced with this dilemma.

Mr. Field: I thank the Minister for that reply. I wish to be absolutely clear about the position, even though other hon. Gentlemen may have grasped it. Let us assume that a person's unemployment benefit covers his needs allowance and supplementary benefit, as at present. I know that that is not so, but let us assume it, for the sake of the illustration. The only additional payment is the rent payment. In those circumstances, does the payment for the rent come from the DHSS or from the housing office? I thought that part of the aim of this scheme was to cut the responsibilities of one Department and give it to the other.

Mr. Rossi: I hope that I understand the hon. Gentleman. If people are receiving only help with their

housing through the DHSS, and not in receipt of any other supplementary benefit, they are the people who will be floated off. If, as a result of floating off, they have to pay a rent of a given figure and find that their income is then below the needs allowance, they will be topped up. They are the topping up class—the potential losers who, as a result of being floated off supplementary benefit on to housing benefit then find that their income falls below the supplementary benefit level. They will then be topped up to the supplementary benefit level. Because they receive that topping up, they will automatically receive all the ancillary benefits about which the hon. Member for Birmingham, Perry Barr (Mr. Rooker) expressed concern.
We are thus left only with the gainers. They are the people who will find themselves financially better off to the tune of about £1·40 to £1·43 a week as a result of the change that we are making. Potentially, they stand to lose indirectly, because they are no longer in receipt of a supplementary payment, either as housing assistance or as topping up. They will not then be passported automatically to the other benefits, such as the free prescription charges. We believe that most of them will be entitled to those benefits and services on other grounds. For example, if retirement pensioners fall within the category of gainers, as floaters off, they will get free prescriptions because they happen to be retirement pensioners. Where they are not, there are existing arrangements whereby people not on supplementary benefit or FIS qualify on the ground of low income for free welfare foods, free prescriptions, and help with NHS charges. Broadly speaking, people will get this kind of help if their incomes are at or marginally below or marginally above the supplementary benefit levels. As we discussed on an earlier amendment, there will be ways in which those people can claim these ancillary benefits, even though the consequence of floating them off the supplementary benefit does not give them an automatic passporting to them.

Mr. Race: Is there any benefit that people claim through an income eligibility scale because of low income—for instance, free prescriptions or free dental treatment—as a result of which they are likely to be caught when floated off supplementary benefit, thus losing their automatic passport to other benefits? If there is any other benefit where the income eligibility scale creates that difficulty? Can the Minister assure us that the scheme will be changed to remove that problem?

Mr. Rossi: None comes to mind. Obviously such problems are teething problems in any new scheme. We shall monitor the scheme carefully. And I hope that the SSAC, too, will monitor the scheme and tender advice. We shall have to judge the scheme in the light of experience, and the necessary changes will be made to ensure that there is no unintentional hardship whereby people lose rights that they otherwise would have. Of course, when it comes to spending money, I must show the usual caution and say "Subject to resources and economic and other circumstances allowing".
That brings me to what the hon. Member for Stockport, North (Mr. Bennett) said about water charges. What he proposes would involve a substantial financial commitment. It would cost roughly £74 million to do what is suggested in new clause 10 which has not been selected for debate.
For all the reasons that we have discussed in connection with other amendments—the nil-cost basis, the lack of


resources, the constraints upon me and so on—I would not have been able to accept new clause 10 if it had been selected. I do not have £74 million for that purpose. If I had £74 million to play with there are lots of other things in the social security field that I would prefer to use that money for rather than for the payment of water charges, which, like utility charges, both Governments have accepted should not be met from benefit specifically intended for other matters.
I cannot accept the new clause in the terms that it has been proposed to the House because it requires the Secretary of State to impinge and infringe upon the independence of mind of the SSAC. It is a matter for the committee and we hope that it will look at these matters. I am sure that it will. However, it is up to the committee when, how and why it does it. Beyond that I cannot help the House.

Mr. Rooker: No Labour Member is impugning the integrity of the SSAC by saying that it is not independent. That should not be read into the debate at all.
As he and his colleagues did last Thursday, the Minister always answers my hon. Friends' calls for change by saying that he has not got the money and if he had he would have other priorities. He never tells us what those other priorities are. I think that it can be fairly assumed from the Minister's remarks that he accepts the spirit of the new clause. He did say that if unintentional hardship was caused the matter would be looked at. He then realised that he had stepped beyond the bounds and qualified it by saying "if economic circumstances permit". However, if the Minister—even in this Government—admits that hardship is again being caused he will not stand idly by, in what will be election year, and do nothing.
That being the case, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 14

REVIEW OF DECISIONS

'(1) Regulations may make provision for requiring or enabling in prescribed circumstances the Secretary of State to review any determination under this Part and as to the consequences of any such review.

(2) Regulations under this may in particular provide for any decision on a review carried out in accordance with the regulations to be subject to appeal in such circumstances and in such manner as many be prescribed.'—[Mr. Andrew F. Bennett.]

Brought up, and read the First time.

Mr. Andrew F. Bennett: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this, it will be convenient to take new clause 16—Appeals.

Mr. Bennett: The whole question of appeals is an important area. It is particularly disappointing that there are no Conservative Back Benchers in the House at the moment. [Interruption.] I am pleased to see the hon. Member for Scarborough (Mr. Shaw) enjoying the debate. He will be concerned about the rights of the individual and the right to appeal against decisions. No doubt he will join in the debate. I certainly hope that many other Conservative Members will look at this area.
It is one of the major weaknesses of this section of the Bill that many people's rights to appeal against decisions are being reduced. New clause 14 simply takes one of the clauses that the Minister tabled to the first part of the Bill, deletes some of the words which seemed to be irrelevant and repositions it in the second part of the Bill. I hope that it will give the Minister wide powers to set up art appeals procedure. That is not our preferred position. We would like to see that power specifically given to the supplementary benefit appeals tribunal. That is the purpose of new clause 16. I suspected that the Minister might have some difficulties in accepting that new clause, so I tabled this more general new clause, which allows the Secretary of State by regulation to review decisions.
When I tabled an amendment in Committee, the Minister said that he would be in favour of the local authority setting up a special committee of councillors who were not involved in the original decision to hear appeals. We would all have been pleased with that if the Minister had gone one stage further and said that there should be a final appeal to the Secretary of State. However, in Committee, the Minister said that that was impossible and that the Secretary of State could not be bothered with the possibility of appeals. Having assured us that there would not be many appeals or dissatisfied people, the Minister argued that there would be many, and that the Secretary of State could not listen to them all.
There must be some safeguard so that the matter is not left entirely to local authorities. In Committee, would have accepted the proposal for an appeal to councillors, provided that there was an ultimate appeal to the Secretary of State. In that way, if it became increasingly clear that the system was not working throughout the country, the Secretary of State could intervene. I am offering the Secretary of State the best solution. By regulations, he can introduce whatever appeal procedure should prove satisfactory.
Many pressure groups—particularly the Child Poverty Action Group—believe that it would be most appropriate to make appeals to the existing supplementary benefit tribunals and that would be the most helpful solution. However, the Minister seems set against that. He has not spent long enough considering the labyrinth of potential problems. The more we have considered the Bill, the more complicated it 'has become. As a result, people will feel that there has been an injustice and will want some right of appeal.
It is worth considering the way in which appeals now take place. If someone's application for supplementary benefit is turned down or if he does not receive the right amount, he has a right to appeal to the supplementary benefit tribunal. If the person is still dissatisfied after the hearing, he can make further appeals. There is a known and tried procedure. Many of us have been critical of the system and have said that it is often slow and that consequently people are sometimes granted money long after their need has passed. We have pointed out that they sometimes have to get by without the money. Often, such procedures are a little unsatisfactory.
Most people feel that the process is better than nothing. That procedure exists for anyone claiming supplementary benefit. Someone on supplementary benefit can claim a right to have part, at least, of his rent or rates paid. However, at present, those who do not qualify for that type of benefit qualify for the housing benefit. They only have the right to appeal to the council and it would seem that


most local authorities do not have a specific appeals procedure. However, it is possible to make representations to a local councillor. Of course, representations are being made about a relatively small proportion of a person's total income, and not about the whole of his income.
If someone is dissatisfied about the way in which his supplementary benefit has been administered, he can make representations via his Member of Parliament to the Secretary of State, or via his Member of Parliament to the Ombudsman. Representations about the existing housing benefit can be made via a councillor and if he refuses the applicant can make representations to the local Ombudsman about the way in which local housing benefit has been administered.
Therefore, the system is fairly complicated. Although the Secretary of State is unifying housing benefit, he is not prepared to unify the appeals procedure. He will have two different appeals procedures running side by side. As a result, the two systems may come into conflict. Someone may apply for supplementary benefit, receive it and then be passported to the housing department to receive his 100 per cent. housing benefit. The housing authority may, for some reason, be dissatisfied with the passporting.
Although the Bill and the regulations may not have that intention, the local authority could decide that it was unprepared to pay the whole of the housing benefit. It might be that the local authority believed that someone had moved deliberately from cheap rented accommodation into dearer rented accommodation and that the move was not necessary, so it would not be prepared to pay all the benefit.
That is illogical, but whereas in the past that individual would have had the right to appeal to a supplementary benefit tribunal against the decision to withhold the higher rent he must now go to the local council and will have lost one of his rights.
There is also the case of someone who goes first to the housing department rather than to the supplementary benefit office. He is told that he qualifies for a 100 per cent. housing benefit and is also told that he qualifies for topping-up payments from supplementary benefit. If he qualifies for some of those benefits, the housing department will decide whether he receives them but the money will be paid out of supplementary benefit. There will be a problem. To which body should he appeal if there are difficulties? It may be that the housing department is happy to say that he can get the housing benefit but is not prepared to give him the passport back to supplementary benefit. Does he then appeal to the supplementary benefit appeals tribunal or to the local authority?
I could go on to show that there can be many difficulties when an individual will not know whether he should appeal to the housing authority or to the supplementary benefit appeals tribunal. The simple thing is to say that the provision of the benefit and any appeal against it should be considered by the tribunal. Then someone will not be refused on one regulation by the local authority and on a different regulation by the appeals tribunal. We could run into many problems, so I suggest that we have one appeals procedure.
One could envisage two appeals running at the same time—one to the local authority and one to the tribunal. It would be illogical if, on the same facts, one found in

favour of the claimant and the other found against, but that sort of position could develop unless a proper appeals procedure is built into the legislation.
I hope that the Minister will give us a clear undertaking now that he is seriously considering the appeals procedure, that he has listened to all the advice that he received from the outside groups who have lobbied on behalf of the disadvantaged for the appeals procedure to be conducted by the supplementary benefits tribunal, and if he cannot say tonight that that is what he will do that he will at least say that he will take powers in the Bill to provide an appeals procedure. If he decides to leave the appeals procedure with the local authorities, he should retain the right to intervene and to reverse unfair decisions, because it is important that income support between one local authority and another should be fair and just and does not vary according to the whim of a group of locally elected councillors.

Mrs. Ann Taylor: My hon. Friend the Member for Stockport, North (Mr. Bennett) moved new clause 14, with which is grouped a new clause in my name and several of my hon. Friends. New clause 16 also deals with the appeals procedure but has somewhat more specific proposals. We are standing by what we suggested in Committee—that the right of appeal available to claimants under the housing benefits scheme should be a right of appeal to a supplementary benefit appeals tribunal.
My hon. Friend the Member for Stockport, North said that his suggestion is not what we prefer, because we believe that the Minister should be more specific and should accept the existing procedure for many of those who can claim their housing benefit as part of their supplementary benefit. The Minister said in Committee that he could make some headway. He suggested that local authorities should have committees specifically to consider the possibility of appeals from people who were dissatisfied with their level of housing benefit.
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We told the Minister then that that was not an adequate procedure for several reasons, but we were distracted in Committee about whether there was sufficient discretion in the scheme to warrant an appeals procedure. The Minister must acknowledge tonight that there are sufficient areas of discretion in his proposed scheme to warrant a full appeals procedure being available to all claimants.
When we discussed the matter in Committee on 23 February, the Minister eventually outlined some of the areas of discretion that he believed were important. I remind the Minister of some of the points that he raised, because he should not have quoted matters to us in Committee without being prepared to acknowledge their importance at this stage of the proceedings. I hope that he will acknowledge that there is a need for an appeals procedure because of the importance of the points that he mentioned in Committee. For example, he acknowledged that the local authority had much discretion on the determination of the status of claimants and whether people should be classified as non-dependants or sub-tenants. He said that local authorities had the power to decide the eligible rent for rate rebate or allowance purposes. He acknowledged that local authorities had a discretion on unreasonably high rents. He acknowledged and informed us that local authorities had the power to operate generous local schemes.
As to those schemes and appeals under them, we say that the local authority should have its own appeals procedure. However, we need a much wider procedure, such as we are suggesting, for housing benefits as a whole. The Minister raised many other points, such as rent arrears, assessment of incomes, the backdating of benefits, the length of the rebate period and the method of granting payments.
If the Minister examines the Committee Official Report of 23 February, he will see that I pointed out several other areas of discretion, which add up to a large area where claimants might say that they had been badly treated by a local authority in determining their right to housing benefit and the amount of that benefit. The Minister should acknowledge that there are wide powers of discretion under the scheme and, therefore, a basic need for a right of appeal.
We stand by what we said in Committee and what the hon. Member for Brighouse and Spenborough (Mr. Waller), who unfortunately is not with us this evening, said in Committee about it being important not only that justice should be done but that it should be seen to be done. If local authorities are to act as the administrators and the appeal body of the scheme, they may be seen as the judge and jury. Justice may not seem to be done and many claimants may feel aggrieved about decisions that affect them so fundamentally.
Another point that the Minister should bear in mind is that raised by my hon. Friend the Member for Stockport, North. If there is no right of appeal is not to the supplementary benefit appeals tribunal, many people will lose out on their present rights. That is important, because it was not the Minister's original intention to provide a scheme whereby some people lost out on existing appeals procedures and rights. The Minister did not cover that point adequately in Committee. I hope that he will deal with it this evening.
It is essential that in such a scheme there should be consistency of decisions from one area to another. Yet if the only people who are to consider the grievances of claimants are local councillors, there will be no procedure to ensure that the guidelines laid down by the Minister will be uniformly administered throughout the country. Under the Minister's suggestion of local authority committees of appeal, what procedures will he adopt to ensure that there is uniformity in the administration of the scheme?
We also find the scheme for local committees of appeal unacceptable because of the present financial constraints on all local authorities. If local authorities interpret their discretion generously and treat claimants generously, they will have to find from their resources a small proportion of the rebates that are to be paid to the claimants. Even though the local authorities will have to find only 10 per cent. of the total amount to be paid to claimants, many councillors will think twice before using their discretion generously, even at appeal stage, because of the financial considerations. Therefore, the Opposition do not believe that the local authority committee is a good idea. We stand by what we said in Committee—that we should unify the appeals procedure so that we adopt the best possible practice from the claimants' point of view. We stand by new clause 16—that the right of appeal should be to a supplementary benefits appeals tribunal.

Mr. Race: The Government are seeking to do today what they did in Committee: they are voting down an amendment by using their majority. That goes against the principles of natural justice.
We are seeking to establish rights for housing benefit claimants that are taken for granted by millions of other people. Only the hon. Member for Brighouse and Spenborough (Mr. Waller) criticised what the Government did in Committee. He said that the Government must ensure not only that justice is done, but that it is seen to be done. That is right. We wish to see a system 'whereby claimants who are prevented from obtaining the correct benefit by a local authority will have somewhere to go on appeal. At the moment, under the proposals in the Bill, they have nowhere to go.
That position is made even worse by the fact that we have not yet seen the regulations that will put the Bill into operation in detail. Although the Minister spent a considerable time in Committee going through the areas where he thought that a local authority had discretion to do one thing or another, local authorities may have more discretion to interpret the regulations than he thinks.
In such a situation it is right that a claimant should have the opportunity to go through an appeals procedure. There are many areas where claimants for benefit already have that right. Reference has already been made to the appeal rights of supplementary benefit claimants who are refused benefit. Those who receive national insurance benefits can go through an appeal system. There is also the rating appeal to the valuation panel. My hon. Friend the Member for Stockport, North (Mr. Bennett) mentioned the appeals system in the Education Act 1980 by which a parent can object to the choice of school that is being offered to a child by a local authority.
The most important appeal principle of all is the appeal that the wealthy or moderately well-off can have by recourse to the courts. Can anyone believe that people who are not being paid their housing benefit in the proper way will have the means to go through the courts to protect their interests in the same way as many people do, who have specific financial interests to defend when those interests are under attack?
One of my final points concerns the way in which local authorities may deal with appeals if left to themselves. When we discussed the matter in Committee, the Government proposed a national code of practice. If there is a national code of practice, that may not solve the problem. Although many local authorities will seek to have good practice and although many local authority councillors will seek to ensure that any code of practice is carried out properly in their area, there may be officers in local authorities who say, privately or publicly, to their elected councillors—their masters—that if they allowed the system to develop and let it be known that many people could object to the way in which the housing benefit was worked out, the council's administrative system would be flooded with claims against the way in which the benefit was worked out, making it impossible for the officers to do the job. I fear that, although there is a national code of practice and although there is the possibility of such a code being imposed by the Government, there may be a problem because the officers of local authorities may not be as sympathetic to the principles of an appeals system as they should be.
As the hon. Member for Brighouse and Spenborough made plain in Committee, we are seeking to defend the


principles of natural justice and to enable people to have somewhere to go if they have a legitimate grievance. I would be astonished if the Government sought to defend a system that was indefensible; in other words, if they did not recognise the right of appeal against an injustice meted out to an individual claimant.

Mr. Field: I support new clause 16. In doing so I want to look briefly at the two arguments that the Minister put forward in Committee on why the House should not accept a new clause such as this. One point in the argument that the Minister presented was that the scheme was a simple one easily understood by most of us. I showed by my earlier intervention that I did not fully understand it, so the chances are that quite a few other people do not fully understand it.
The image that the Minister presented was that that simple scheme would be easy to administer because somehow people's lives fitted easily into little boxes. However, our experience as Members of Parliament dealing with our constituents is that people's lives do not come in such easy packages. Once we start the administration of the scheme, we shall find that there are many peculiar differences in people's lives that make it difficult, if not nigh impossible, to operate the scheme fairly without an appeals mechanism.
The more the Minister spoke about how simple the scheme was, the more I was reminded of a comment that Aneurin Bevan made about Neville Chamberlain when the latter was Prime Minister. After listening to Neville Chamberlain he said that he got the impression that life was like a trip round Woolworth's. Everything was in place and nothing was priced over sixpence. However, life is not like a trip round Woolworth's and there are many things that are priced over sixpence.
All too often individual family circumstances can be fairly complicated. Even if the scope of the dispute is limited, as the Minister insists that it will be limited, to the decision on the level of the housing benefit, then the circumstances of many of those families will be difficult to interpret. What better method of arbitration is there than the one we have for claimants who are drawing supplementary benefit and wish to appeal against their benefit or that part of their benefit which relates to their housing cost? That is one argument.
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Even if the Minister's scheme were simple—as I tried to show by my intervention, it is far from simple—the circumstances of people's lives are not simple and they will not fit easily into his scheme. Because of that we need some form of adjudication.
There is a second reason why there should be support for new clause 16, and why there should be opposition to the offer that the Minister made in Committee. The Minister suggested that he would lay down national procedures whereby local authorities would carry out the adjudication. If I remember correctly, in Committee he was thinking that local councillors would do this job. However, if there will be so few disputes—if the scheme is simple and people's circumstances are simple, there will be few disputes—why not let them go to the supplementary benefit appeals tribunals? If there are to be many disputes—the Minister seemed to suggest in Committee that there might well be quite a few—why does

he think that councillors will have the time to take on this task among their many other tasks? Perhaps when he replies the Minister will tell us whether he has had any reaction from local councillors, or bodies representing them, to his idea. Those are two issues that I hope the Minister will take on board.
My hon. Friend the Member for Wood Green (Mr. Race) touched on a further point. This Government rightly emphasise the importance of law and order and the role that our legal system plays in peacefully settling disputes in our society. There is one aspect that is important to the poorer people. They now have the right to dispute with authority over a decision that affects them and take that authority to an independent tribunal, yet the Minister is tearing up that right. It is a serious matter for any Government to do that. Governments and Parliaments should be in business to extend and codify rights and not make out that the due process of law is an unimportant way of making sure that our nation settles its disputes peacefully.
These are three reasons why the Minister should have second thoughts. First, it will be a complicated scheme and people's lives are complicated. There will be many disputes, and those disputes ought to be settled independently. Secondly, although we are grateful for the Minister's offer about national guidelines on how councillors should settle these disputes, what evidence does he have that these people are either suitable to do this task or wish to do it? Thirdly, it is surely an important stage in our history when a Conservative Government come forward to destroy the rule of law in one area of people's livelihood.

Mr. Rossi: These two new clauses ask me to do two separate and contradictory things. I shall try to discuss each in turn, but before doing that I should like to put on record the Government's case, as the Opposition have not represented it fully or fairly.
The Government support the need for new arrangements for claimants to challenge the decisions of local officers who have considered their case. It is in the interests of everybody that these arrangements should be as speedy and as direct as possible, especially when we consider that housing benefits will be a weekly benefit, the detail of which will be essentially set out in the regulations.
Housing benefits will be built upon the current rent and rate rebate and allowance schemes. There are no detailed review arrangements in the present legislation, but a number of authorities have rightly set up their own arrangements whereby claimants can challenge officers' decisions before a committee of elected councillors. Our proposal is to build on this good practice. We shall set out in regulations provisions whereby all the housing benefit claimants would have the right to a review of their housing benefit determination by a committee of councillors. The committee's decision, with reasons, would have to be given to the claimant in writing. Thus, good practices would become a general requirement, which it is not at the moment. For the first time, all rent and rebate allowance claimants will be assured of a decent and detailed review if they are dissatisfied.
There is also the additional safeguard that I announced in Committee, that Ministers will keep a close watch on this part of the scheme. We shall be asking the authorities to provide the Department with information about the


number and kinds of reviews that they undertake, and the outcome. If we see particular problems arising we shall be able to amend the regulations to ensure that equity prevails.
In answer to the hon. Member for Birkenhead (Mr. Field), I have not yet had the opportunity of discussing the detailed arrangements with the local authorities but my officials have been able to establish that their initial reaction to the outline proposal is favourable.

Mr. Field: I wish to develop further the point that the Minister touched upon before replying directly to one of my points, for which I am grateful. If we take the point that the Minister has just made that the Government will keep this under review and, if he finds that there are inconsistencies, unfairnesses or injustices, will then send out new guidelines to local authorities, will the Minister tell us something about the time scale?
I should have thought that it would be difficult for the Minister to collect information within the first year of the scheme coming into operation. If he tries to do it earlier, many local authorities will tell him that there will be little point in completing the returns. Therefore, it will be about 14 months before he can report back to the House on how the scheme is operating.
Within that time most people will have had to settle on what their new rent levels are. What right of appeal do they have to open up disputes where they have felt they were unfairly treated, when the Minister issues new regulations? It will be months if not years later before the Minister gets to know how some of our constituents have been treated.

Mr. Rossi: Questions of time scale are always difficult, especially in an operation of this kind but we shall be monitoring it closely. At the slightest signs of difficulties and problems we shall immediately begin discussions with the local authorities concerned to try to resolve those problems. In the background there is always the prospect of amending regulations being brought in if we find it impossible to resolve the problems by discussion, or in any other way, with the local authorities that may be creating a situation that might be reckoned to be undesirable by any reasonable standards.
I have put forward these particular proposals for a number of reasons. First, they build on the existing successul arrangements. I say "successful arrangements" because I know from my personal knowledge the way in which this system has already operated in local authorities that have instituted it. I have not been able to find any suggestion from anybody that the present way in which local authorities deal with matters of this kind has given rise to any particular problem. So, in so far as we are building upon something that has proven itself, I think that Labour Members are possibly exaggerating the fears and the problems that might arise.

Mr. Race: rose—

Mr. Rossi: It seems inevitable that the confusion between supplementary benefits, housing benefit and rent rebate will crop up. It arose in an earlier discussion in which the hon. Member for Birkenhead participated. Those in receipt of supplementary benefit who are entitled to passported rent and rate rebates have to be paid by the local authorities, but someone's entitlement to supplementary benefit is an issue to be determined by the existing

statutory procedures. It is determined by a benefit officer and there is the right of appeal against his decision. Local authorities will have no say. Once a person has been established as entitled to supplementary benefit, he will be given a certificate on which the local authority must act. It will be obliged to give 100 per cent. rebate for both rents and rates. Indeed, that will carry through to water charges.
For the topping-up cases an automatic supplementary benefit payment is not made. These are those who have been floated off on to housing benefit, but because they are losers as a result of being floated off they receive a topping-up payment. As I have explained, the topping-up payment is itself a supplementary benefit. If someone is dissatisfied because he feels that he is not being properly treated by not being given the topping-up payment, he can appeal to the supplementary benefit appeals tribunal. We are left, therefore, only with those who are not in receipt of supplementary benefit and who are not topping-up cases but who apply to the local authority for rent or rate rebate as at present.
We are proposing by regulations to set up a mechanism whereby they can challenge the local officials' decisions in a way that cannot now automatically be done as of right. We are proposing that those who are in that position should be able to ask locally elected councillors to deal with the problem. Some authorities have this procedure already. Those that do not will be asked to conform with the new form of good practice that we are proposing to introduce.
I accept that to a certain extent councillors will have an interest in the decision. However, they have an interest first and foremost as elected representatives for their local community. They have a responsibility to their electors and to the community that they serve. I have known a great many local councillors in my political life and I have had a great deal to do with local government. I have found that councillors discharge their obligations and duties fairly and conscientiously. I cannot believe that the fears that are being expressed by Labour Members about the inability of local councillors to see fair play are well founded. However, as I have said, we shall monitor the scheme closely. If we see that problems are arising, we shall discuss them with the local authorities that are concerned. If we find that discussions do not resolve the problems, we shall have to resort to amendments and regulations.

Mr. Race: I am not really concerned about the attitudes of local councillors, and I suspect that that is not the concern of my hon. Friends. I am concerned that the officers who will filter the claims of beneficiary claimants will build bureaucratic procedures. Secondly, I am concerned about whether an appeal system that is staffed by local authority officers will be seen to be independent and fair by claimants. I do not believe that the Government's proposals meet that test.

Mr. Rossi: I do not accept that. I hope that the hon. Gentleman is wrong and that I am right but time will show. If he is right and I am wrong, the matter will be cured in the way that I have suggested. Any person who is aggrieved by an official's decision will, under our proposals, have the right to make a complaint in writing, which will require councillors to review it. The councillors will have to give their reasons in writing in turn to the complainant. There is question of filtering in the sense that the hon. Gentleman seemed to imply. Officials will not


keep these matters from councillors. If someone is dissatisfied, he will be entitled to demand that the issue be brought before councillors.

Mrs. Ann Taylor: Does the Minister agree that the scheme that we are discussing is extrememly complex and that to understand it many councillors will have to rely to a great extent on the advice that will be given to them by their officials, who will have made the decision against which the claimant is appealing? The Minister says that there are not many complaints within the existing rent and rates rebate scheme, but will he acknowledge that the new scheme will be far more complex and that there will be far more areas of discretion for the local authorities to administer?

Mr. Rossi: In a sense the present rent and rates rebate scheme is complex, but local authorities have been able to manage. There has not been any evidence of widespread discontent or, indeed, any discontent. We have received letters from outside pressure groups and Opposition Members are responding to those groups' requests. The pressure groups want these matters to be taken out of the hands of local authorities. They would prefer them to be dealt with by the Secretary of State or by an appeal tribunal. Many days and weeks have elapsed since we discussed this issue in Committee and no one has produced evidence to show that the present system under which rent and rate rebate questions are determined has caused any problems, let alone any problems of magnitude.
We shall build upon the existing scheme. We shall make some modifications to it to enable it to harmonise with the current benefit schemes. The modifications will relate to status and levels of additions. The changes to the current scheme will not be so complex and drastic as to cause councillors to find it beyond their ken to contemplate and resolve the issues that are presented to them.
I hope that I have explained adequately to the House that supplementary benefit issues will remain within the supplementary benefit system and will not go across the desks of local councillors. I suggest to the Opposition that their fears are exaggerated. It is right that they should probe the Government proposals and advance alternative suggestions, but at the end of the day a judgment must be made. I have not yet been convinced by anything that has been said that the Government's judgment is wrong and that what has proved its worth in the past will prove unsatisfactory in future. We are making it universal. We are making it apply to all local authorities. It will be spelt out in regulations in a way in which it is not now spelt out, and we shall monitor it. I ask the House to accept that as a reasonable proposition.

Mr. Field: The Minister does not seem to realise that there is an issue of principle at stake here. The principle is whether power should be concentrated or spread around. We believe that it is safer for a democracy to have checks and balances rather than a state of affairs in which people with vested interests, however well intentioned they may be, make all the decisions.

Mr. Rossi: I am simply saying that the scheme is more than safely left in the hands of elected representatives who are very much answerable to the people whose affairs they will decide under the scheme.

Mr. Race: But they do not know the regulations.

Mr. Rossi: New clause 14 deals with whether local authorities should be answerable to anyone. The hon. Member for Stockport, North (Mr. Bennett) has again advanced the idea that was discussed in Committee—a review of local authority decisions by the Secretary of State—and has added the refinement of a further right of appeal against the Secretary of State's review.
I did not find the prospect of the involvement of the Secretary of State attractive when it was discussed in Committee, and I do not find it attractive now. The Secretary of State cannot personally consider all the requests for reviews that might be made. On the figures for mid-1981, there will be more than 6 million claimants for housing benefit. Even if only one-tenth of 1 per cent. asked for a review, that would produce 6, 000 cases. The Secretary of State would of necessity have to leave such work to officials, who in turn would depend upon reports received from officials of the local authority. Even if the locally elected representatives, the councillors, had to clear their officials' reports before they were sent to the DHSS officials, I would still regard that as a bad arrangement. It would be slow, indirect and cumbersome and it would be largely out of the control of elected representatives, be they councillors or Ministers. Inevitably, a system of that type must be run and decided upon by officials.
New clause 16 proposes that there should be an appeal to the supplementary benefit appeals tribunal. My own proposals will ensure, for the first time, that all non-supplementary benefit rebate claimants will have a right to a review of their claims. Supplementary benefit claimants would no longer be able to appeal to the SBATs, if I may so call them, on decisions affecting their rebate assistance—by which I mean the figures relating to their rent and rate rebate assessment, not their entitlement to supplementary benefit or topping-up.
The Opposition have not thought through their new clause and the wording that they have employed. It is defective in that, by not referring to local authorities, rent allowance cases are not covered. That is an unfortunate oversight that I am sure that they would not wish to see pass.
Apart from defects of that kind in the new clause, I do not believe in any case that the supplementary benefit appeals tribunals are appropriate to intervene in local authority matters. We are dealing not with the supplementary benefit or topping-up aspect, but with housing benefits, with rent and rate rebates, which are local authority matters. The SBATs form part of the independent supplementary benefit adjudication system. They have a very specialised role. Their main task is lo review decisions of the independent supplementary benefit officers. They have no expertise at all in the calculation of housing costs using the existing rebate rules and needs allowance formula. To extend their remit to housing benefits would be to require them to take on a new and in many ways very different role. They would have to develop expertise in housing benefit rules from scratch, at a time when they are still building up their knowledge of the new supplementary benefit scheme introduced in 1980.

Mr. Field: Leaving aside the point about tribunals needing expertise to administer the scheme—it is debatable whether local councillors have that


expertise—the Minister has just said something that is new to me in terms of how extensive will be the loss of rights resulting from the change made by the Government.
Until now, I had thought that only those receiving exclusively housing benefits would lose the right of appeal. The Minister now says that all claimants will lose the right of appeal on that part of their benefit which relates to their housing costs, thereby disenfranchising about 4 million households from the right of appeal. That is far more serious than the position that I thought that we were debating.

Mr. Rossi: I am saying that the supplementary benefit appeals system remains to deal with all questions relating to supplementary benefit—entitlement to supplementary benefit and topping-up. I have already said that two or three times. Questions relating entirely to housing benefit—rent and rate rebates and rent allowance—will be dealt with under the new proposals that I have outlined, and which will be subject to close scrutiny and review. We believe that those matters are best dealt with in the local authority milieu because they are local authority problems, rather than in the supplementary benefit milieu in which the necessary experience and expertise do not exist.

Mr. Field: Does the Minister realise how serious a change that is? Most supplementary benefit claimants, when they make an appeal, do not really understand the ground for their appeal. They often put on their appeal form "I cannot manage—I cannot pay my rent". When they go before an appeals tribunal the members try to find out whether the claimant is entitled to some form of help even if it is not the help for which they are asking. What is now happening under this procedure—which is very serious indeed—means that one whole area on which supplementary benefit claimants in the past used to appeal will no longer be acceptable from the word "go". Therefore, claimants will not have a chance of appearing before an appeals tribunal. The chance is that if they do appear before an appeal tribunal, the members will see whether they can offer any help at all. It is a much more serious change than the Minister is trying to present to the House tonight.

Mr. Rossi: It is also a question of scale and size. We discussed these matters in Committee. I would remind the hon. Member for Birkenhead of the figures that I quoted for April to September 1981, which is the latest period available. There have been 54, 318 appeals against supplementary benefit decisions. Of these, 1, 969 were lodged specifically on housing cost assessments and only 152 were successful. One cannot say in the light of that experience that a great number of people will be disadvantaged. The scale of the operation is relatively minute. In any case one cannot say that the system we are proposing for the determination of these matters by local authorities through the procedures I have outlined will be any less satisfactory to the claimants than has been the position up to now under the supplementary appeals tribunal system. All the evidence is the other way.
8.30 pm
The way in which local authorities have been seen in the past, and are seen currently, to deal with questions of rent and rebate assessments has shown no cause for concern. Therefore, I do not see why, in the minute number of cases that are likely to arise, there should be any

great concern. There is always the proviso—and I am repeating it for the third and fourth time—that we shall closely monitor the size of the problem. If it is greater, it will be dealt with; it will be looked at.

Mr. Field: I promise not to intervene any more on this clause, but the figures the Minister has given are misleading for the reason that many people on their appeal forms put such statements as "I cannot manage". They then go before an appeal tribunal, and if they have two or more good members on the tribunal those members try to find if there is any help they can offer to the claimant. As an example, they may well find that the rent share has not been worked out correctly, and that the claimant is entitled to more benefit.
To present us with figures showing that only 1, 000 appealed on rent is misleading. What those figures do not do is to take account of ways in which appeals tribunals find that they can help claimants when so many claimants who do not understand the scheme appeal on the grounds that "It is impossible to manage. Can the tribunal help me?".

Mr. Rossi: On the general point of somebody who finds that life has generally become too much for him, that he cannot manage financially and is seeking help, we hope he will still go the DHSS and ask for help. If he does, his entitlement to supplementary and all other benefits will be carefully considered. He will have a right of appeal if he feels that a wrong decision has been reached.
There will be some people who, instead of going to their local DHSS office, will go to the town hall because it is nearer or more convenient. They will say "Look, I cannot manage with my rent, I want some help". That will trigger off a consideration of whether that person is entitled to a rent or rate rebate.
Subject to the kinds of procedures I have mentioned I want to emphasise that—and this is part of the working arrangement that we intend to build up between the local authorities and the DHSS—if it becomes apparent to the people at the town hall that the person concerned requires more help than is possible through the rent rebate scheme and that his case ought to be considered for supplementary or other benefit, he will be referred to the local office for that purpose.
So there will be two nets to catch people who find that they cannot cope with life: they either go to the supplementary benefit office or they go to the town hall. If it is a supplementary benefit provision, a State provision, financial help, benefits and all the rest of it, we hope that we shall be able to give the officials in the local authorities sufficient instructions and sufficient information on whether there is a prima facie case for further entitlement. That person will then be referred for supplementary benefit. The people concerned will be better off in that they will not be placed in the dilemma of choosing which benefit to take. There will be no question of going to the town hall and electing to take the wrong benefit, which is a problem now. They will be caught up by one agency or another and referred to the correct benefit. The hon. Gentleman is once again possibly fearing more than he need. The proposals offer claimants a direct and speedy means of seeking and securing a review of their housing benefit claims from the body best able to help them—their local council.
The alternatives suggested by the Opposition are more cumbersome. They require a major shift in the operation


and outlook of the supplementary benefits appeals tribunal. We do not need to go down that path to provide a means of challenging local authority decisions when my proposal builds on an existing system in many authorities. The Opposition have not shown that the present system is defective or that local councillors are not able to pursue instances on behalf of their constituents where officials have made a wrong decision.

Mrs. Ann Taylor: We still believe that the new system is far more complex than the one that he says is not creating difficulties. Will he acknowledge that not only are the Opposition and some outside pressure groups recommending appeals to a supplementary benefit appeals tribunal but also his advisory committee on rent and rate rebates and allowances? Should he not also take account of what it said?

Mr. Rossi: The advisory committee did not consider the matter in the round. There were some aspects to which its members did not apply their minds. We take the considerations of ACRRRA seriously, but when it made those observations it had not fully considered the Government's alternative proposals. Its advice would have been more valuable if it had first done so.

Mrs. Taylor: Is the Minister saying, having made his new interpretation of how the local authority appeals procedure is to work, that if ACRRRA now says, after considering his new proposals, that it still believes that there should be a supplementary benefit appeals tribunal, he would reconsider the matter?

Mr. Rossi: We would always seriously consider any advice from ACRRRA, but at the end of the day the judgment must be ours. Clearly, we would be interested in ACRRRA's considerations after it has had an opportunity of considering our proposals. We want to ensure that we have a system that is effective, speedy and practicable. For the reasons I have given we would need a lot of convincing that it is practicable to deal with these local authority matters at supplementary benefit appeals tribunals. The expertise is not there. They would have to be trained. I am not sure that that procedure would produce the quick result that is obviously needed where a weekly benefit is at stake.

Mr. Andrew F. Bennett: The Minister has helped hon. Members, but his speech was disappointing. The hon. Gentleman has put on record what the Government intend to do. Opposition Members do not feel that what he says goes far enough. I do not believe that the Minister has examined what actually happens to individuals under the existing system and what is likely to happen to them. It is all very well working on the theory of the Department and the advice that he receives. The hon. Gentleman should sit in on one or two appeal tribunals and trail around with a few people to the offices to see what happens in practice.
The hon. Gentleman argued that there was no difficulty. If someone applied for and got supplementary benefit, he would have a 100 per cent. passport to housing benefit. What happens if that individual moves from cheap accommodation to more expensive accommodation? Is the hon. Gentleman saying that the local authority will have no discretion about whether to pay the new rent and rates

because that person has moved from cheap to expensive accommodation? That would be very nice, but I suspect that the Minister is not saying that the individual will have the right to move from cheap to possibly expensive accommodation and that the local authority will still automatically pay without argument.
I shall give another instance. A woman, the tenant of a house, applies to the local authority for a rebate and it is granted on the basis that a man living in the house is merely the lodger. She then applies for supplementary benefit, or a topping up from supplementary benefit, only to be told that the man is being treated not as the lodger but as the cohabitor. The woman does not like the situation and therefore appeals to the tribunal. Does the decision of the tribunal have an effect on the local authority? Does the local authority reverse its decision? Or does the woman decide that she will not appeal against the decision or that she will not apply for supplementary benefit because her lodger might be treated as a cohabitor?
We have two different sets of regulations. I was pleased when the Minister made it clear in Committee that the existing housing provisions, which treat someone else living in the house as a lodger, as opposed to a situation in which questions would be asked about whether they were cohabiting, was very good and that it would remain in the local authority scheme. If the Minister starts to think about the matter, he will realise that there could be different interpretations by the housing appeal tribunal and the social security advisory tribunal. Many people will cross from one side of the divide to the other. If different criteria apply, problems will quickly arise. The Minister should examine the matter again. I hope that the hon. Gentleman will be pressed in the other place to include a proper appeals procedure.
It was interesting during yesterday's debate on the Mental Health (Amendment) Bill to discover the degree to which hon. Members were concerned to ensure that people were given their legal rights and that there was a proper appeals procedure. Many hon. Members, I am sure, will want to insist that the Government adopt a proper appeal procedure. I accept that my amendment is only a halfway house and that it is not particularly satisfactory. I therefore beg to ask leave to withdraw the amendment in the hope that my right hon. and hon. Friends will press new clause 16 to a vote.

Motion and clause, by leave, withdrawn.

New Clause 16

APPEALS

'Any claimant of housing benefit shall have a right of appeal to a Supplementary Benefit Appeals Tribunal against any decision of a housing or rating authority regarding his entitlement to or level of housing benefits.'.—[Mr. John.]

Brought up, and read the First time.

Motion made and Question put,  That the clause be read a Second time:—

The House divided: Ayes 108, Noes 160.

Division No. 103]
[8.44 pm


AYES


Atkinson, David (B'm'th, E)
Buchan, Norman


Atkinson, N.(H'gey, )
Callaghan, Jim (Midd't'n&amp; P)


Bennett, Andrew(St'kp't N)
Campbell-Savours, Dale


Booth, Rt Hon Albert
Clark, Dr David (S Shields)


Boothroyd, Miss Betty
Cocks, Rt Hon M. (B'stol S)


Bradley, Tom
Coleman, Donald


Brown, Hugh D. (Provan)
Concannon, Rt Hon J.D.






Cook, Robin F.
McKay, Allen (Penistone)


Cowans, Harry
McNamara, Kevin


Craigen, J.M.('G'gow, M'hill)
McWilliam.John


Crowther, Stan
Marks, Kenneth


Cunliffe, Lawrence
Marshall, Dr Edmund (Goole)


Cunningham, G.(Islington S)
Marshall, Jim (Leicester S)


Cunningham, Dr J. (W'h'n)
Martin, M(G'gow S'burn)


Dalyell, Tam
Mason, Rt Hon Roy


Davidson, Arthur
Maynard, Miss Joan


Davis, Terry (B'ham, Stechf'd)
Mikardo, Ian


Deakins, Eric
Mitchell, R. C. (Soton Itchen)


Dean, Joseph (Leeds West)
Morris, Rt Hon C. (O'shaw)


Dixon, Donald
Morris, Rt Hon J. (Aberavon)


Dormand, Jack
Morton, George


Douglas, Dick
O'Neill, Martin


Douglas-Mann, Bruce
Parry, Robert


Dubs, Alfred
Powell, Raymond (Ogmore)


Dunlop, John
Race, Reg


Dunwoody, Hon Mrs G.
Radice, Giles


Eadie, Alex
Roberts, Albert (Normanton)


Eastham, Ken
Robinson, G. (Coventry NW)


Edwards, R. (W'hampt'n S E)
Rooker, J. W.


Ellis, R. (NE D'bysh're)
Rowlands.Ted


Evans, Ioan (Aberdare)
Sever, John


Evans, John (Newton)
Silkin, Rt Hon J. (Deptford)


Field, Frank
Silverman, Julius


Fletcher, Ted (Darlington)
Skinner, Dennis


Freud, Clement
Smith, Cyril(Rochdale)


Golding, John
Spearing, Nigel


Grant, George(Morpeth)
Spriggs, Leslie


Hamilton, W. W. (C'tral Fife)
Stoddart, David


Harrison, Rt Hon Walter
Stott, Roger


Home Robertson, John
Taylor, Mrs Ann (Bolton W)


Homewood, William
Thomas, Dafydd (Merioneth)


Hooley, Frank
Thomas, Dr R.(Carmarthen)


Howell, Rt Hon D.
Thorne, Stan (Preston South)


Hoyle, Douglas
Tinn, James


Hughes, Robert (Aberdeen N)
Varley, Rt Hon Eric G.


Hughes, Roy (Newport)
Wainwright, R.(Colne V)


John, Brynmor
Welsh, Michael


Jones, Rt Hon Alec (Rh'dda)
White, Frank R.


Jones, Barry (East Flint)
Wilson, Gordon (Dundee E)


Kilfedder, James A, 
Winnick, David


Lamond, James
Woodall, Alec


Leighton, Ronald
Wright, Sheila


Lewis, Ron (Carlisle)



Litherland, Robert
Tellers for the Ayes:


McCartney, Hugh
Mr. Frank Haynes and


McElhone, Frank
Mr. James Hamilton.


McGuire, Michael(Ince)





NOES


Alexander, Richard
Chapman, Sydney


Alison, Rt Hon Michael
Churchill, W.S.


Aspinwall, Jack
Clark, Hon A. (Plym'th, S'n)


Atkins, Robert(Preston N)
Clark, Sir W.(Croydon S)


Atkinson, David(B'm'th, E)
Clarke, Kenneth (Rushcliffe)


Beaumont-Dark.Anthony
Clegg, Sir Walter


Bendall, Vivian
Cockeram, Eric


Benyon, Thomas(A'don, )
Cope, John


Berry, Hon Anthony
Cranborne, Viscount


Best, Keith
Dean, Paul (North Somerset)


Bevan, David Giiroy
Dorrell, Stephen


Biggs-Davison, Sir John
Douglas-Hamilton, Lord J.


Blackburn, John
Dover, Denshore


Bottomley, Peter (W'wich W)
Dunn, Robert(Dartford)


Bright, Graham
Eggar, Tim


Brinton, Tim
Fairgrieve, Sir Russell


Brooke, Hon Peter
Faith, Mrs Sheila


Brotherton, Michael
Fletcher, A. (Ed'nb'gh N)


Brown, Michael(Brigg&amp;Sc'n)
Fletcher-Cooke, Sir Charles


Brown, John (Winchester)
Fookes, Miss Janet


Bruce-Gardyne, John
Forman, Nigel


Buck, Antony
Fowler, Rt Hon Norman


Budgen, Nick
Fox, Marcus


Burden, Sir Frederick
Fraser, Peter (South Angus)


Butcher, John
Gardiner, George(Reigate)


Cadbury, Jocelyn
Goodlad, Alastair


Carlisle, John (Luton West)
Gorst.John


Carlisle, Kenneth (Lincoln)
Gray, Hamish





Greenway, Harry
Percival, Sir, Ian


Griffiths, PeterPortsm'th N)
Pollock, Alexander


Grist, Ian
Porter, Barry


Gummer, John Selwyn
Prentice, Rt Hon Reg


Hamilton, Michael(Salisbury)
Proctor, K. Harvey


Hawksley, Warren
Rathbone, Tim


Hayhoe, Barney
Renton, Tim


Heddle, John
Rhodes James, Robert


Henderson, Barry
Rhys Williams, Sir Brandon


Hicks, Robert
Ridley, Hon Nicholas


Higgins, Rt Hon Terence L.
Rifkind, Malcolm


Hill, James
Roberts, M. (Cardiff NW)


Hogg, Hon Douglas(Gr'th'm)
Roberts, Wyn (Conway)


Holland, Philip(Carlton)
Rossi, Hugh


Hunt, John(Ravensbourne)
Shaw, Giles (Pudsey)


Jessel, Toby
Shaw, Michael(Scarborough)


Jopling, Rt Hon Michael
Shepherd, Colin(Hereford)


Kellett-Bowman, MrsElaine
Silvester, Fred


Knox, David
Skeet, T. H. H.


Lang, Ian
Speller, Tony


Latham, Michael
Spence, John


Lawrence, Ivan
Spicer, Jim (West Dorset)


Lee, John
Sproat, Iain


Lester, Jim (Beeston)
Stainton, Keith


Lewis, Kenneth (Rutland)
Stanbrook, Ivor


Lloyd, Peter (Fareham)
Stanley, John


Lyell, Nicholas
Stradling, Thomas.J.


McCrindle, Robert
Taylor, Teddy (S'end E)


Macfarlane, Neil
Tebbit, Rt Hon Norman


MacGregor, John
Temple-Morris, Peter


McNair-Wilson, P. (New F'st)
Thomas, Rt Hon Peter


Major, John
Thompson, Donald


Mather, Carol
Thornton, Malcolm


Maude, Rt Hon Sir Angus
Townend, Joh n (Bridlington)


Mawhinney, Dr Brian
Trippier, David


Maxwell-Hyslop, Robin
Viggers, Peter


Mellor, David
Waddington, David


Meyer, Sir Anthony
Walker-Smith, Rt Hon Sir D.


Miller, Hal(B'grove)
Waller, Gary


Mills, Iain(Meriden)
Ward, John


Mills, Peter (West Devon)
Warren, Kenneth


Moate, Roger
Watson, John


Monro, Sir Hector
Wells, Bowen


Montgomery, Fergus
Wells, John (Maidstone, )


Morgan, Geraint
Wheeler, John


Morris, M. (N'hampton S)
Wickenden, Keith


Murphy, Christopher
Wilkinson, John


Myles, David
Winterton, Nicholas


Neale, Gerrard
Wolfson, Mark


Neubert, Michael
Young, Sir George (Acton)


Newton, Tony



Page, Richard (SW Herts)
Tellers for the Noes:


Parris, Matthew
Mr. Tristan Garel-Jones and


Patten, Christopher(Bath)
Mr. David Hunt.

Question accordingly negatived.

New Clause 17

HOSTELS

'Claimants living in hostel accommodation shall be treated on the same assessment basis with regard to entitlement to housing benefit as all other claimants.'.—[Mrs. Ann Taylor.]

Brought up, and read the First time.

Mrs. Ann Taylor: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Ernest Armstrong): With this we may take Government amendment No. 67.

Mrs. Taylor: New clause 17 deals with people living in hostel accommodation and stresses the point that we made in Committee: people who live in hostels should be treated on the same assessment basis, for entitlement to housing benefit as all other claimants. We note that the Government have put down an amendment about hostel


dwellers and I presume that that is the corrected version of the amendment that the Opposition put down in Committee.
When we discussed this in Committee, the Minister, who will again reply this evening, made some favourable noises about the Government's attitude to people in hostels. He agreed to meet outside organisations concerned with this problem. We want to know this evening the Government's response to the problems now that they have had that meeting and what they will do to improve the situation for people in hostels on the changes brought about by this legislation, especially to ensure that people in hostels get equal treatment. We also want to know what the Minister intends to do in order to use this legislation as an opportunity to remove some of the anomalies that he acknowledged in Committee existed for people in hostels.
I hope that the Minister will be helpful this evening, although I am slightly perturbed that he has postponed a second meeting with CHAR and SHAC until after this debate. As I understand it, a meeting should have occurred yesterday but was postponed until later in the week. I hope that that is not bad news about the Minister's attitude and, as the meeting was due to take place yesterday, that he can fully inform the House of the Government's intention on hostel dwellers. Presumably, he did all his homework beforehand in preparation for yesterday's meeting—the meeting that was not—as well as tonight's debate. Therefore, I hope that he will reveal all about the Government's intentions, although more briefly than his colleague did on the new clause we have just debated.
I ask the Minister to deal specifically with three points because we want to be brief. First, what consideration have he and his Department given to the definition of boarders? We know that there have been past difficulties with the DHSS and local authorities disagreeing on whether people living in certain hostels should be classified as boarders or should try to obtain entitlement as householders. For example, the residents of a lodging house in Coventry with 220 places had individual rooms with locks—perhaps better described as cubicles with locks—and the DHSS said that they were not boarders and not entitled to DHSS payments.
As the local authority did not want to treat those people as householders, they were obviously placed in a difficulty and the matter had to be resolved on appeal. It was resolved in the way that classified those people as boarders. The issue needs to be clarified before we proceed, because more and more voluntary organisation and housing association hostels are trying to give each person some accommodation to himself. The Minister should clarify the grey area here.
9. pm
The second point was one that I raised in Committee about the position of a person living in a hostel who then finds employment. The person will lose supplementary benefit and only be able to claim housing benefit. In view of the amount of eligible rent that is defined as part of the hostel charge, the person may be no better off in work than out of work, because of the loss of supplementary benefit entitlement. Had time permitted, I could have given an example to show how easy it is for a person to be worse off and out of pocket, simply because he finds work and

because, under the housing benefit scheme, the amount which can be claimed as eligible rent in hostel accommodation will be limited. I hope that the Minister will tell us how he thinks that the regulations should be framed to assess the eligible rent of a person living in hostel accommodation.
The third matter, which again was raised in Committee, is one about which the Minister himself expressed concern. It relates to the minimum qualifying periods before local authorities are willing to accept a person in hostel accommodation as a resident. When we discussed the matter in Committee on 16 February, the Minister said that some local authorities
have taken a fairly hard line and refused to grant benefit if a person occupied accommodation for less than six weeks.—[Official Report, Standing Committee B,  16 February 1982; c. 500.]
I hope that the Minister will introduce regulations or give guidelines to local authorities. He could do that before the legislation is passed, because his Department already has the power to do so. I hope that he will tell us now that his Department is willing to clarify the position about residential qualifications and to issue an instruction to local authorities about residential qualifications. If he thinks that six weeks is a hard line, I hope that he will tell us this evening what the thinks is a resonable time limit. I hope that he will at least tell us that local authorities will be instructed that six weeks is an unreasonable time. If so, it will clear up what I said in Committee about authorities such as Kensington and Chelsea which have a six months' qualifying period. If the Minister thinks that six weeks is hard, he must think that six months is quite outrageous.
Those, briefly, are the points that I hope that the Minister will clarify this evening. I hope that we shall thus make progress, and that the Minister will not just be sympathetic, as he was in Committee, but will make specific proposals.

The Under-Secretary of State for the Environment (Sir George Young): The Minister will try to be as helpful as he can, but I have to say in advance that I cannot reveal all, as I was invited to do by the hon. Member for Bolton, West (Mrs. Taylor).
I have much sympathy with the new clause, because its intention is to avoid any discrimination against hostel dwellers under the new housing benefit scheme. We have already accepted that the current situation whereby some local authorities refuse to grant benefit to hostel dwellers until they serve a long qualifying residential period is unacceptable. We tabled amendment No. 67, to which I shall come in a moment, to remove such discriminatory practices.
A second issue covered by the amendment is whether hostel dwellers in receipt of supplementary benefit should obtain rent and rate assistance via that benefit or through the housing benefit scheme. As one reads the amendment, they would be switched on to housing benefits instead of supplementary benefit. I am not sure that that is in the interests of hostel dwellers.
Supplementary benefit claimants who live in hostels are assessed as boarders under regulation 9(9)(b)(ii) of the Supplementary Benefit (Requirements) Regulations 1980. Their entitlement to supplementary benefit is assessed in a different way from other supplementary benefit recipients. Instead of having their entitlement assessed on the basis of a scale rate, plus additional requirements, plus an amount for housing costs, they are assessed on the basis


of their board and lodging charge, plus any additional requirements, plus an amount for personal expenses. The amount included in the assessment for board and lodging covers not only rent and the rates, but also board, heating charges and other service charges which would not be eligible for housing benefit.
Those different elements are not separately assessed for supplementary benefit purposes. Therefore, it would not be a simple matter for the supplementary benefit officer not to award an amount for rent and rates and instead to issue a passport which entitled the claimant to housing benefit. It is the local authority's responsibility to assess eligible rent and rates and the supplementary benefit officer would not know by how much to reduce the board and lodging award until the housing benefit had been calculated. The claimant—who might well be in urgent need—would have to wait, both for his housing benefit and his supplementary benefit.
The definition of a boarder is a matter for the interpretation of the regulations by the chief supplementary benefit officer. The great majority of hostel dwellers would be treated as boarders rather than as people who rent their accommodation. I am not convinced that in practical terms a hostel dweller, or any other boarder in receipt of supplementary benefit, would be in any way better off if the rent and rate element of his entitlement came via housing benefit instead of as part of his supplementary benefit payment. As that is the impact of the new clause—whether it was intended or not—I would have to advise the House to reject it.
On a more positive note, officials are currently discussing with the local authority associations and the voluntary organisations most concerned—SHAC, CHAR and the Scottish Council for Single Homeless—how best to help hostel dwellers and other boarders with their rent and rates. I can assure the hon. Lady that there is nothing sinister in the postponement until Thursday of the second meeting in that series. We have very much in mind not only what would be desirable in theory—on which there is no disagreement—but, more important, what would be the most practical arrangements for claimants as well as authorities. I cannot pre-empt those discussions with an amendment which I believe would not be in the claimant's interests. However, I can assure all hon. Members that there is no intention to single out hostel dwellers from any other boarders in receipt of supplementary benefit. Against that background, I hope that the new clause will not be pressed.
The hon. Lady asked me what I would consider to be a reasonable qualifying period. In column 503 of the Official Report of our Committee proceedings, the hon. Lady suggested that a qualifying period of two weeks might be reasonable. The matter is under negotiation, but I think that the hon. Lady is in the right territory when she puts that forward as a possible basis for local authorities to agree on. I hope that we can carry them with us in suggesting a qualifying period in that area.

Mrs. Ann Taylor: Is the Minister willing and able to issue guidelines to local authorities on this matter, possibly even in advance of the housing benefit scheme coming into operation? His powers to issue guidelines, and the whole question of qualifying periods, come under the 1980 Housing Act rather than anything to do with this. Is the Minister willing to do that within the next few weeks or months?

Sir George Young: As I understand it, the negotiations are continuing and we hope that they will be concluded before the guidelines are issued. I think that both sides accept that there will have to be some minimum qualifying period. Two weeks is what the hon. Lady suggested in Committee.
Once we achieve agreement with the local authorities on the qualifying period, we can promulgate guidelines or regulations. At this stage, while we are talking to local authorities and the voluntary organisations, it would be wrong for the DHSS to weigh in and say that that must be the minimum qualifying period. The discussions are going well and there is agreement on the principle. However, we should let those discussions continue and not pre-empt them by a minimum one-week or two-week period.
I turn to Government amendment No. 67. In Committee I gave an undertaking to re-examine the position of those who rent a room for a short period. I accepted the cause for concern expressed by many hon. Members in Committee. The amendment is intended to remove what is, in effect, a qualifying residential period. It provides for regulations to be made, under which someone who occupies a dwelling otherwise than as his home—in other words, far too short a period for the dwelling legally to be regarded as his home—to be regarded as occupying it as his home for housing benefit purposes.
Hon Members may well say that we should have deleted the words "as his home" from the clause. But there is a simple reason why we did not do so. If we had, we should have had to draw up further regulations to exclude people such as holidaymakers or travelling business men from claiming housing benefit on their temporary accommodation. The proposed amendment avoids that difficulty, while achieving the desired effect of ensuring that hostel dwellers are not arbitrarily excluded from housing benefit because they have lived in a hostel only for a short time.
We are trying to tackle the administrative problems that I have mentioned. Discussions are proceeding with voluntary bodies and local authority associations on how best to overcome them. When officials have reported back, we shall consider the content of the regulation. I cannot tell the House at this stage precisely how the regulation-making power will be used, but the regulation will have to come before the House in due course.
By tabling the amendment, I hope that we have shown our good intentions and that the amendment will command general support. Against the background of the Government's good will and intent, I hope that the Opposition will not press new clause 17 to a Division.

Mrs. Ann Taylor: To get anything like co-operation from Government Ministers today is a change. Therefore, we shall not press the new clause to a Division.
I welcome the Minister's remarks about the qualifying period and I am glad that he intends to make progress. Obviously, we shall have to leave some of the other points to the hon. Gentleman's further discussions with outside bodies. However, will he bear in mind the important point about those who live in hostels who manage to find work? They may be a few in number but the housing benefit scheme must take account of such people. Therefore, will he give serious consideration to the basis upon which eligible rents will be assessed for those who live in hostel accommodation?
It is something of an achievement that the Government are not outright opposed to the provision. Therefore, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Clause 26

THE STATUTORY SCHEMES

Amendment made: No. 67, in page 20, line 20 at end insert—
'(aa) for treating any person who occupies a dwelling otherwise than as his home as if he occupied it as his home;'.— [Sir George Young.]

Sir George Young: I beg to move amendment No. 68, in page 20, line 27, after 'relates', insert —
'(dd) for enabling any rebate or allowance granted to a person not entitled to it to be recovered by the authority or the Secretary of State, and to be so recovered by deduction from a prescribed benefit;'.

Mr. Deputy Speaker: With this, it is convenient to take Government amendments Nos. 69 and 72.

Sir George Young: I hope that the substantive amendment is straightforward. It has two main purposes. First, it gives the Secretary of State power to recover overpayments of housing benefit. Secondly, it allows him to do so by deduction from prescribed benefits. It also contains a reference to local authority recovery. That is purely technical.
The unamended Bill is wide enough to cover local authority recovery, but, because we are now providing for an alternative channel of recovery, we also need to mention local authority recovery. Otherwise, the inclusion of one means—the Secretary of State—might be taken as suggesting the exclusion of the other, the local authority. I commend the amendment to the House.

Amendment agreed to.

Mr. Race: I beg to move amendment No. 80, in page 20, leave out lines 30 and 31.
Amendment No. 80 seeks to delete the transitional safety net provisions in clause 26. I make it absolutely plain to the Minister that this is a probing amendment because we wish to have information from the Government about the effects of the safety net. We do not wish to remove the safety net in any way.
The Labour Party believes that 75p as a level of loss beyond which one cannot go is too high, because we do not believe that there should be any losers under the scheme. If there are to be losers, the loss should be reduced to below 75p. However, what we really wish to know from the Government is for how long the safety net will last. We received assurances in Committee that the safety net provision will last for 12 months, with the possibility of renewal thereafter. We hope that we can receive a firm assurance from the Minister tonight that the Government will continue the safety net provisions so that where an individual claimant stands to lose a substantial amount in housing benefit because his means are above the needs allowance the losses that he would incur would be limited, as they will be during the first 12 months of the operation of the scheme.
I also wish to press the Government on the 75p level of loss. We have had some conflicting information so far

about the numbers involved in the 75p level of loss. How many people would be affected if the safety net were removed? That is important in relation to the operation of the safety net during the next few years. The Government have introduced transitional provisions. Our probing amendment seeks simply to elucidate information. I hope that the Minister can now tell us that the safety net will continue for a considerable time.

Mr. Andrew F. Bennett: I too wish to use this as a probing amendment and I wish to find out whether what the Minister said in Committee still stands—that he will pinch the Christmas club money from my constituents who are on supplementary benefit. His statement in Committee was one of the most disturbing and mean aspects of the legislation.
I explained in Committee the problem that faces most people on supplementary benefit. They never receive their full rent from supplementary benefit. They are paid a little short in almost every week because supplementary benefit operates on the basis that there are 52 weeks in the year whereas most local housing authorities work on the basis of 50 or even 48 weeks. The custom and practice has developed in local authorities that it is not convenient to collect rents at Christmas and holiday times. By not collecting then, the annual rent is divided between 48 or 50 weeks. The tradition grew up that one had a rent-free week either at Chrismas or at the town's holiday period. It was not really a rent-free week, because the money was distributed over the rest of the year.
Many local authorities have now formalised the system by which the claimant receives two rent-free weeks at Christmas. The result is that most claimants of supplementary benefit receive so much less each week than their full rent and that has to be made up out of other income. At Christmas they receive two weeks' rent money from supplementary benefit, which they do not have to pay to the housing department. Effectively, they end up with two weeks' rent money that is saved for them for just before Christmas. In Committee I asked the Minister whether those people, when the change-over to having the rent paid direct occurs, will be credited with the two weeks. For many claimants the sum works out to between £30 and £40. That is a considerable amount of money.
Will the Minister confirm that, in the transitional period, he will not, as he suggested in Committee, take the money away from them but instead will make the transitional provisions such that when people switch from receiving the rent, which must be handed over to the local authority, to a position where the rent is transferred directly, they will not lose that money because of the difference in calculating rent on 50 weeks and supplementary benefit on 52 weeks?
I hope that the Minister can give that assurance. If he cannot, many of my constituents who traditionally have seen the two rent-free weeks as a bonus that has managed to get them through all the extra expenses associated with Christmas, will be extremely bitter.

Sir George Young: Whatever were the objectives of the hon. Members for Wood Green (Mr. Race) and Stockport, North (Mr. Bennett), they will not be achieved by pressing the amendment, which could deprive the Secretary of State of the right to make most transitional arrangements. Therefore, I hope that the amendment will not be pressed, because it would disadvantage many people.
The most obvious effect would be to prevent the arrangements being made to protect the taper losses over 75p on a marked time basis. The hon. Member for Wood Green suggested that such protection should be made a permanent feature of the scheme, or, at any rate, that it should be carried on for a considerable period. The new tapers for incomes above the needs allowance will be 21p under the rent scheme and 7p under the rate scheme. They will apply to all incomes above the needs allowance and will appear in the regulations as part of the statutory scheme. But because the tapers are higher than the existing ones, some tenants stand to lose 5p for each £1 of income above the needs allowance.
The transitional measures that the House is being invited to delete enable us to limit such taper losses to 75p on a marked time basis. Without the regulations, there would be no compensation. If this were made a permanent feature of the scheme, it would cost about £14 million at current prices. The finance is not available to put that amount of money into the scheme on a permanent basis without finding it from somewhere else. That would create new losers so the problem would not be solved at all. I cannot accept that spending £14 million in the way that has been suggested is the most sensible way of using the resources available.
I was asked to give the number of people who are protected by the safety net. It is estimated that 460, 000 people benefit from restricting the taper losses to 75p. Our intention is to phase it out over a period of time but the method has not finally been settled, and we shall have to discuss the matter further with the local authorities.
The hon. Member for Stockport, North referred to the two rent-free weeks at Christmas. This is a matter of swings and roundabouts. It depends when one joins the scheme and at what point one leaves it. The hon. Gentleman mentioned the losers, but there are, of course, some gainers whom he did not mention. It is undeniable that some people with rent-free weeks over the Christmas period will lose as a result of the partial introduction of the benefit scheme in November. However, those with rent-free weeks outside that period, and before the partial start, will gain. This type of effect has always been implicit in the scheme. When there are rent-free weeks, and a different basis for compensation, there will be gainers and losers. The simple answer is that it is not practicable to compensate individuals for this, because it would involve establishing the duration of each claimant's entitlement during the 1982–83 financial year and separately calculating adjusting payments. In fairness, one would then have to recover money from those who had gained in order to compensate others. The administrative complications do not justify the effort involved.

Mrs. Ann Taylor: The Minister mentioned administrative complications. Surely he agrees that the safety net will be difficult and complex to administer by local authorities. Will he acknowledge that if the Government had accepted the new clause that we moved earlier with different taper rates of 19p and 6p, the safety net proposed in the transitional arrangements would not have been necessary? Will the Minister also tell the House exactly what the maximum amount is that any family may lose once the safety net is exhausted after a year, if that is the transitional period? When the original consultative document came out, it seemed that some families would lose a great amount of money each week. The Minister

proudly said in Committee that he would limit those losses in the first year to 75p. What is the maximum once that safety net no longer exists?

Sir George Young: The hon. Lady raised two points. With regard to her first point, I was in the Chamber when she proposed an alternative method for dealing with the tapers. However, it was never clear to me where the money was to come from. Unless the hon. Lady wants to alter the basis on which the Government have brought forward the scheme, that is a nil-cost basis, she would create losers somewhere else. If her answer is that we should have found additional money from the £30 million or another source, she is entitled to make that argument, but it cuts clean across the basis on which the Government have introduced the scheme.
Secondly, the hon. Lady pressed me for a figure which, I am happy to say, I cannot give because that would depend on the basis of the upratings when the protection was withdrawn. If one withdrew the protection at the time of an uprating, in cash terms any financial loss might be reduced to nil. However, the information is not available to me. As we have not decided at what rate the 75p will be phased out, that is not a question that it is practical for a Minister to answer.
Therefore, I hope that amendment No. 80 will not be pressed as it would be disadvantageous to many people. I hope that the assurances and the figures that I have given will be acceptable to the House.

Mr. Race: We are grateful for the information that the Minister has given, but I am disturbed by the fact that nearly half a million households will be protected by the safety net. Given the large number of people involved, it is important to protect them against the consequences of any removal of the safety net at any stage.
As the Minister is not, for understandable reasons, capable of saying what would be the consequences for individual families if the safety net were removed and what would be the maximum loss that those families would incur, it is incumbent on the Government to come back to the House at a suitable moment and to say when they intend to announce the way in which the safety net will be dealt with over the next few years. I hope that they will make a statement to explain who will lose, when and why.
The Government are being mean over the way in which they are dealing with the administrative costs of die Christmas bonuses to those who receive housing benefit. It is important that people do not lose under that scheme. I would not like to see any of my constituents or those of my hon. Friend the Member for Stockport, North (Mr. Bennett) losing because the council in their area operated a 50-week rent year rather than a 52-week rent year and that the rent-free weeks were being withdrawn because of administrative decisions.
However, we did not want to detain the House for long on this amendment. For the reasons that I have given, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mrs. Ann Taylor: I beg to move amendment No. 77, in page 20, line 31, at end insert—
'(2A) In making regulations under this section the Secret try of State shall ensure that any payments for furniture paid as part of the rent for the dwelling shall be included in the assessment of rent eligible for rebate purposes'.


The amendment is concerned with those people who live in furnished accommodation and who have to pay an amount for furniture as an integral part of the rent that they pay each week or month. We discussed this briefly in Committee and the Minister made some remarks that I hope he will be able to take further this evening.
We were told that the clause already in the Bill is sufficiently wide to allow the Government to direct authorities that any payments in respect of furniture or furnished accommodation could come under the scope of subsequent regulations. The Minister said that it could all be done later by regulation.
We hope that the Minister will now have had time to consider the points made to him in Committee, and that he will tonight make a clear commitment that the Government intend to include furnished accommodation as eligible for full rebate of the whole of the rent being paid weekly. We think that that is the only way to be fair to those forced to live in furnished accommodation.
There are two points that the Minister must bear in mind. One is that there are people who are receiving money for the furniture part of their rent at the moment and that unless he gives an assurance that this will continue some people will be losing the money that they now get.
Secondly, the Minister has to acknowledge that those who live in furnished accommodation do not, by and large, do so out of choice but because they have no alternative accommodation available. Therefore, they are forced to pay for the furniture, good or bad, that might be provided by their landlord. They have no option, so that part of their rent should be included in the assessment.
The amount of money that we are discussing is extremely small in the Government's terms or even in the terms of this legislation. We are talking about £1 million only. Therefore, the Labour Party expects a clear commitment from the Minister, not simply assurances that he will go away and look at this again. We want a simple, straightforward statement that he will include furniture or that he will accept our amendment and give us a guarantee that that will go into the regulations that he will subsequently bring to the House.
There has been no give by the Government this evening. They have not spent an extra penny all day. The changes announced at the end of the Committee stage in the RPI for supplementary benefit and the removal of housing benefit will, for the reasons given, which were acknowledged by the Minister for Social Security earlier, allow the Government a saving of possibly £30 million in a full year. On that basis, the Government will be making a profit out of the proposed changes and I urge the Minister to give us an assurance that the measly amount of £1 million will be used for those living in furnished accommodation.

Sir George Young: The hon. Member for Bolton, West (Mrs. Taylor) has made the speech that her hon. Friend the Member for Stockport, North (Mr. Bennett) expected her to make in Committee when we dealt with this matter. There is a good case for making these charges eligible for housing benefits to bring them into line with the supplementary benefit scheme, although one could argue that this would give tenants with furnished

accommodation an unfair advantage over those with unfurnished accommodation as the latter have to make provision for furniture out of their resources.
The hon. Lady is preaching to the converted. The difficulty is, as always, money—perhaps £1 million a year. The hon. Lady suggested that we were making money out of the scheme. It is being introduced basically on a nil-cost basis but we are putting back into the scheme roughly £10 million of the administrative savings.
There is a cost because furniture charges are not currently eligible for rent rebates or allowances. We are talking about additional benefits. The cost would have to be found from savings elsewhere in the scheme. We are examining whether it will be possible to arrive at an acceptable method of financing such a change. We intend that the extra help will apply to both rebate and allowance schemes and not only to rebates, as has been suggested in the amendment. If we followed that proposal, the consequences would be unfair to private tenants.
As the hon Member for Bolton, West has implied, the amendment is unnecessary because the powers in clause 25(3) are already sufficiently wide to permit any payments in respect of dwellings to form part of the eligible rent for housing benefit purposes. The regulations will specify which charges will or will not be eligible. They could in theory include as eligible charges for furniture.
If the finance can be found, the appropriate regulation will be drafted. I cannot give a firmer assurance than that. We have not reached the check-out yet, and we are not able to make a final calculation of the cost of the scheme. If we can find the money, the regulation will be drafted. I concede the force of the argument that the hon. Lady has advanced. In the meantime, I invite my right hon. and hon. Friends to resist amendment No. 77.

Mrs. Ann Taylor: I do not think that that response from the Minister is adequate. It is not suficiently sympathetic to say that the amendment can be accepted only if savings are found elsewhere. Surely the Minister will be able to find the £1 million that we are discussing when examining administrative costs and rounding up the figures. I accept his argument that allowances should be covered as well as rebates. I cannot accept that we should be putting those who live in furnished acommodation at an advantage over those who live in unfurnished acommodation by implementing the amendment. Most of those who live in furnished accommodation do not do so out of choice. They accept that accommodation because they cannot find alternative accommodation.
The Minister's answer is extremely disappointing. I hope that by the time the Bill reaches another place he will be far firmer. If he is not, I am sure he will find difficulties in another place. In view of the timing that is on us this evening, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mrs. Ann Taylor: I beg to move amendment No. 78, in page 20, line 31, at end insert—
'(2A) In making regulations under this section the Secretary of State shall ensure that no discretion is given to a local authority to determine that the rent or rate payable for accommodation is unreasonable unless the authority is first satisfied that the applicant entered into accommodation with the intention of taking unreasonable advantage of the rebate or allowance scheme.'.
The amendment concerns eligible rents. We had a useful discussion on this topic in Committee. Some concern was expressed by myself and my hon. Friends


about the way in which the regulation might be interpreted by local authorities and the way in which it might be used to put pressure on tenants to move to what the individual tenant considered to be less suitable accommodation.
When we discussed this issue in Committee, the Minister was relatively sympathetic. That is presumably because it was the Under-Secretary of State, who is much better at making sympathetic noises, if not at delivering anything when the time comes. The hon. Gentleman said that he thought that local authorities would not use the provisions on eligible rents except in exceptional circumstances. He said that if an elderly person were living in a three-bedroomed house on his own because the rest of the family had moved out, he would not think it acceptable for the local authority to put pressure on that person to move from the family home to a flat or a smaller dwelling in an unpopular area.
We would like a repetition of the assurance that the Minister gave, not least because the Minister for Social Security was not quite as forthcoming when he met outside pressure groups to discuss the issue. We would welcome a renewed assurance from the Under-Secretary of State that he stands by what he said in Committee and that what he said then will be the basis of the regulations and guidelines that the Department will issue.

Mr. Race: This is an important amendment as Opposition Members do not want local authorities to concentrate people on low incomes requiring substantial housing benefit on particular estates. That will be a temptation unless the Government make it absolutely plain in regulations that local authorities must not do it. There is a danger that local authorities will concentrate beneficiaries of housing benefit on estates where there are relatively low rents to minimise the amount of money that they must pay in benefit.
We note that the Under-Secretary of State for the Environment gave assurances on that point in Committee. We hope that he will either accept the amendment or give some specific assurances about non-discrimination. It is not just a question of discrimination that local authorities may practise against people in receipt of housing benefit whom they concentrate on particular estates. It is a question of discrimination in other areas, which the Under-Secretary of State knows is important from his experience of wearing his other hat. I do not want to see concentrations of ethnic minority communities who may claim housing benefit in a way that was never intended by the House. I hope that the Under-Secretary of State will be forthcoming on that matter.

Sir George Young: The hon. Member for Bolton, West (Mrs. Taylor) said that I was more sympathetic than my hon. Friend the Minister for Social Security. We possess sympathy in equal quantities but fate has dealt my hon. Friend the more difficult amendments and new clauses. He has dealt with them very well.
In the new housing benefit scheme, the Government are abolishing the maxima of the amount of benefit that a claimant can receive. That is helpful. We are making the change because we believe that there are circumstances where application for the maximum by, for example, a large family on a low income who need a large house, could be treated harshly. On the other hand, there must be some safeguards of the public money that is spent on benefits. Even Opposition Members will agree that we

must prevent abuse. We should not use public money to satisfy exaggerated or unrealistic housing ambitions. To prevent that, we have decided quite simply to follow the practice of the present rent allowance schemes. Thus, a local authority will be given discretion to reduce the amount of rent or rates considered as eligible for housing benefit when the property is too large or the rent is too high when all the circumstances are taken into account.
The movers of the amendment obviously accept that there is a need for such a power but seem anxious to restrict rather severely its use. Even given that an authority could satisfy itself that someone was moving into a dwelling that was too expensive with the intention of taking advantage of housing benefit, as opposed to making a foolish miscalculation, the amendment would allow possible abuse to go unchecked. For example, the authority would be left powerless if there were collusion between a landlord and an existing tenant to raise rents to take advantage of housing benefit. We do not wish to see that loophole left open.
Local authorities have discretion in respect of rent allowances and they have exercised that discretion since 1972. Opposition Members have not produced one instance in the past 10 years of that authority being misused. This matter has been debated at some length in Committee but there is no evidence that that power has ever been used arbitrarily, nor do I think that it will be. Good management by housing authorities should mean that that power is exercised little with regard to rebates and we certainly do not expect those powers to be used to force elderly persons to move from their family homes.
In response to the invitation from the hon. Member for Bolton, West, I repeat the assurance that I gave in Committee:
it is not normally reasonable to expect an elderly or infirm person to move out of their family home. Nor would it be considered reasonable, for example, to reduce the eligible rent of a council tenant on the grounds that a dwelling was unnecessarily large if the council was unable to offer alternative, smaller accommodation of similar standard in the area."—[Official Report, Standing Committee B, 16 February 1982; c. 473.]
The assurances that I gave stand and we shall abide by them.
I assure the House that the Government will make quite clear by regulation that the age of a claimant must be taken into account before the local authority's discretion is exercised. We shall be giving detailed guidance on its use in the circular that will accompany the regulations. That, rather than making amendments to primary legislation, is the proper approach to the matter.
In response to the hon. Member for Wood Green (NIL Race), we do not expect the provision to be used in any way to concentrate ethnic minorities on particular estates. That would be an undesirable consequence that we are anxious to avoid.
With those assurances, I hope that the hon. Lady will seek leave to withdraw the amendment.

Mrs. Ann Taylor: When the Under-Secretary of State began to speak, I thought that he had picked up his hon. Friend's brief as he seemed distinctly less sympathetic than he was in Committee. However, he then repeated the points that he had made previously. We certainly hope that when the regulations and guidelines are drawn up all the


points that he made will be explained clearly and that local authorities will not be allowed to use the new provisions to discriminate against people whom they wish to remove from larger accommodation.
In anticipation that that will be the case, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Andrew F. Bennett: I beg to move amendment No. 81, in page 20, line 33, leave out from 'dwellings' to 'include' in line 34.
We put down the amendment to get the Government's comments about the treatment of people with mortgages. The scheme was introduced on the basis that it was to be a new combined housing benefit. Yet within the scheme an exception is made from the start in that those buying their houses through a mortgage who need assistance from supplementary benefit will in that respect be kept separate and not dealt with under the combined scheme. If we are to have a combined scheme, it is unfortunate that one category should be separated out at the start. The Government should have given more thought to this.
First, it is most unfair that a person receiving supplementary benefit who has a straightforward mortgage receives assistance with the interest for as long as he needs it, but no assistance with the capital, while a person with an endowment mortgage, because he pays only interest, receives the full cost in supplementary benefit. That is clearly an anomaly.
Secondly, a person buying his own house through a mortgage applies for supplementary benefit to assist with the mortgage, but, as I understand the scheme, he must still go to the town hall, passported, to obtain assistance with his rates. It seems particularly bureaucratic that a person who receives most of his housing cost from supplementary benefit must still go on to the town hall to obtain assistance with his rates. If the Department is not handing over to the local authority responsibility for payments towards the mortgage, it seems far better that he should receive one benefit from supplementary benefit to cover both the mortgage interest and the rate rebate.

Sir George Young: The Government have addressed themselves to the issues mentioned by the hon. Member for Stockport, North (Mr. Bennett) and they were touched on in the consultative document "Assistance with Housing Costs" that we issued in March last year.
In response to the hon. Gentleman's final point about the owner-occupier who has two ports of call to obtain help with his rates and with his mortgage interest, one must set against that the number of council tenants who in the future will have to go to only one place rather than two. I think that he will find that there is an overall reduction in the number of visits.
The hon. Gentleman's basic question was why we had excluded owner-occupiers from housing benefit. To a certain extent, as he pointed out, they are not excluded as they are eligible for rate rebates and their entitlement will depend on income in relation to needs, as expressed by the needs allowance and the amount of rates paid. However, owner-occupiers do not qualify for payments of mortgage interest under the current HB proposals. To that extent, therefore, there is really no change from the existing system for rent rebates and rent allowances. The reason for that is that owner-occupiers in receipt of supplementary

benefit usually have their mortgage interest payments met in full, while others can claim tax relief on the interest payments or its equivalent in the form of option mortgage subsidy. To have substituted housing benefit for these arrangements would have meant a much more thorough-going, complex and arguably unnecessary reform than that which the Government have proposed, since housing benefit builds simply on the existing system of rents and rates assistance provided by local authorities.
Alternatively, to have added housing benefit assistance on to mortgage tax relief, for those receiving this, would have greatly added to the costs. If one did it on a nil-cost basis one would have had to claw back the losses from some other beneficiaries. That is why owner-occupiers are excluded from the HB system. We basically believe that the existing arrangement for helping people on low incomes on supplementary benefit is the right one, and one has the added saving in that, whereas with rents the local authority is the body receiving the rent, that is not the case with those who are paying mortgages.
For those reasons, the Government are anxious to resist the suggestion that owner-occupiers be included within the HB scheme. We see very little advantage to owner-occupiers, and we see a lot of administrative complications, and perhaps some additional costs which the Government simply cannot accept.

Mr. Andrew F. Bennett: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 69, in page 20, line 45, at end insert—
'"prescribed" means specified in or determined in accordance with regulations'—[Sir George Young.]

Clause 28

LOCAL SCHEMES

Mr. Andrew F. Bennett: I beg to move amendment No. 83, in page 22, line 35, leave out clause 28.
I wish to probe the Government a little about local schemes. The amendment is to leave out the provision for local schemes. I am sure that the Government might feel aggrieved since, had they left out local schemes, they might feel we would have pressed to put them back in, but in Committee we spent no time discussing this question.
It sounds a nice idea that local councils should be able to have their own local schemes and it would have to be a more generous scheme, but there are one or two snags in that the Government ought to have had a careful look at this issue. First, if there is to be a local scheme and, if it is to be of any significance or worth administering, it will need quite a lot of extra money to make it work. In present circumstances it is unlikely that most local authorities will have the money to make a more generous local scheme. In addition to local authorities not having the money to make a more generous local scheme, I wonder how much thought the Government have given to how one dovetails a local scheme into the national scheme, because we have all sorts of provisions such as passporting and topping-up. What happens if a local authority has a slightly more generous scheme? How does it affect passporting or the topping-up to the supplementary benefit part of it? For instance, does one have to take into account extra money which has been made available in a local


scheme in calculating the follow-up benefits from supplementary benefit? There are considerable problems here. I hope that the Minister will tell us that he has thought it out and that he has also thought out how local authorities will have the money so that they can make more generous local schemes.

Sir George Young: I can reassure the hon. Member for Stockport, North (Mr. Bennett) that there is nothing sinister in the local schemes. Subsection (2) states that the local schemes can improve the position Only as far as the claimant is concerned. The subsection makes it quite clear that
No modifications under the section shall be such that a person to whom the statutory scheme would otherwise apply receives a rebate or allowance less than that which he would have received under that scheme;
In other words, there is no down-side, and there is a considerable up-side for the claimant. No one can be worse off.

Mrs. Ann Taylor: The local scheme could obviously give the claimant slightly more than he would have received from the overall national scheme. Circumstances could arise in which the claimant receives a small additional sum from the local authority and is, therefore, no longer eligible for a topping-up payment because the amount that he receives is greater than the small amount he might have received from topping up. What provision will the Minister make to ensure that the people who fall into that category are fully aware that they will lose their passporting entitlement?

Sir George Young: That is a rather up-market intervention that should be addressed to Ministers in the DHSS. The impact of the scheme is to enable local authorities to disregard sources of income that the DHSS would otherwise take into account. For example, under existing schemes which entitle local authorities to vary arrangements, local authorities have disregarded the whole of war widows' and war disablement pensions when assessing entitlement to rebates or allowances. Basically, local authorities have the power to disregard incomes that the DHSS takes into account, and thereby increase a claimant's entitlement to housing benefit. Against that background I do not see how anyone could be worse off.

Mr. Andrew F. Bennett: The question that my hon. Friend the Member for Bolton, West (Mrs. Taylor) and I are asking is, will supplementary benefit officers have the power to disregard any extra allowance given under a local optional scheme, or will any benefit given by a local authority be taken into account when working out the rest of supplementary benefit?

Sir George Young: The hon. Gentleman is being unnecessarily complicated. The whole object of the housing benefit scheme is to take housing costs out of supplementary benefit. Supplementary benefit officers will continue to deal with the ordinary non-housing needs of claimants. It will be for local authorities to deal with housing costs. Local authorities have a certain discretion in how they treat a claimant's income when dealing with his entitlement. A local authority's treatment of a claim for housing benefit is independent of how the supplementary benefit officers deal with the non-housing costs. Against that background I do not see how the problems described by the hon. Gentleman arise.
We have had considerable correspondence, particularly from Scottish hon. Members, impressing on us the importance of continuing the discretionary power of local authorities to disregard war pensions. That is an integral part of clause 28, which the amendment seeks to delete. Therefore, I hope that hon. Members will accept that this is a helpful part of the Bill which it would be wrong to take out. It is in the claimants' interests that this discretionary power should remain, and that the House should resist the amendment.

Mr. Andrew F. Bennett: I do not believe that anyone suggested it was not a helpful scheme. We were hoping that the Minister could have thrown some light on the way in which a slightly more generous local scheme would interact with the rest of the supplementary benefit system. It is sad that the Minister could not tell us. Unless he can tell us now, or unless the information is given in another place, it will make a considerable difference as to whether more generous local schemes are set up. I cannot see many local councillors opting for a more generous scheme if they discover that some of their claimants end up worse off because of the interaction with supplementary benefit, or that the local ratepayer is paying for something which could have been paid by supplementary benefit. There are major problems.
I hope that this point can be raised in another place and that we shallelicit from the Government an assurance that if a local authority introduces a scheme there will be no interaction with supplementary benefit resulting in claimants being worse off.

Sir George Young: It is important to sort this out I tried to explain that the local authorities dealing with housing costs of claimants have the discretion to disregard certain types of income which the supplementary benefit or the DHSS may have taken into account. There is no interaction between decisions taken by local authorities in dealing with housing benefit—there is, so to speak, no backlash—on supplementary benefit entitlement, which has already been disposed of. I hope the hon. Gentleman will not pursue that line of attack.

Mr. Bennett: That intervention did not help. I have suggested that the matter should be pursued in the other place but the Minister asks for an example. If someone applies to the housing department and the department decides to give 100 per cent. assistance with rent and rates, that raises the question whether the person is entitled to a topping-up payment from supplementary benefit. Will that topping-up payment be paid on the basis of the local scheme that may disregard various parts of income? Or will it be made on the basis of the national scheme that wall be less generous? The Minister may have the answer on the piece of paper that he has received. If so, I am willing to give way. I suspect, however, that there are problems. There could be a more generous local scheme in respect of disregards or levels—

It being Ten o'clock, the debate stood adjourned.

BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the Social Security and Housing Benefits Bill may be proceeded with, though opposed, until any hour.—[Mr. Cope.]

Question again proposed, That the amendment be made.

Mr. Bennett: This is certainly a matter that will have to receive attention in the other place. Local authorities must be given a clear indication that if they offer a more generous scheme there will be no disadvantages. In view of the hour, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 30

SUBSIDIES TO AUTHORITIES

Mrs. Ann Taylor: I beg to move amendment No. 85, in page 24, line 16, leave out from 'be' to end of line 18.
I wish simply to ask the Minister two questions about local authority costs rather than deal with all the assurances that he has tried to give in the past. I should like to know on what basis local authority costs will be calculated. Will each local authority receive from the Government exactly what it spends in terms of housing benefits, including administrative costs, or will the total costs of the scheme be aggregated on a national basis and shared out among local authorities? If the latter, on what basis will the division be made? Will it be done on the basis of the number of cases with which a local authority deals or the total amount that the local authority pays out?

Sir George Young: The best answer I can give is that it is the Government's intention fully to compensate local authorities for the additional costs that are incurred as a result of the provisions of the Bill. Negotiations are proceeding with local authority associations over how this objective might be achieved. The undertaking that has been given is clear and unambiguous. Where a local authority's costs, on an individual or collective basis, are put up by the Bill, they will be met in full by central Government. This is a handsome and generous offer that central Government have made. It will be difficult for anyone to take issue with the proposal.

Mrs. Taylor: I am surprised that the Minister tries to be provocative at this stage by referring to a handsome and generous gesture. The hon. Gentleman has not answered the question but we shall probably hear the answer subsequently. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 42

REGULATIONS

The Under-Secretary of State for Health and Social Security (Mr. Tony Newton): I beg to move amendment No. 71, in page 36, line 34, leave out from 'of to first 'of in line 36 and insert—

'(a) an order under section 7 or 45(3) of this Act;
(b) the first regulations under section 26(1)(a), (b) or (c) or 28(5) of this Act; or
(c) regulations under section 26(1) made in pursuance of section 27'.

Mr. Deputy Speaker: With this it will be convenient to take Government amendments Nos. 72, 73, 74, 75 and 76.

Mr. Newton: I come in the classical role of the Under-Secretary to sweep up. The amendment is wholly technical, as are the other Government amendments being discussed with it.

Amendment agreed to.

Clause 44

INTERPRETATION

Amendment made: No. 72, in page 37, line 25, after 'in', insert 'Part II and '.—[Mr. Newton.]

Clause 45

SHORT TITLE ETC

Amendment made: No. 73, in page 38, line 5, after '15', insert '19'.—[Mr. Newton.]

Schedule 4

AMENDMENTS AND TRANSITIONAL PROVISIONS

Amendments made: No. 74, in page 49, line 26, leave out from 'there' to 'In' in line 28 and insert
'are inserted the following subsections—

"(6) Where any amount is recoverable under regulations made by virtue of subsection (2)(ii) above it may, without prejudice to any other method of recovery, be recovered by deduction from any familiy income supplement or from any benefit under the Social Security Act 1975 or the Child Benefit Act 1975.
(7)'.

No. 75, in page 53, line 28, leave out from beginning to 'In' in line 29 and insert
'(3) After subsection (2) there are inserted the following subsections—

"(2A) Where any amount is recoverable under regulations made by virtue of subsection (2)(dd) above, it may, without prejudice to any other method of recovery, be recovered by deduction from prescribed benefits.
(2B)'.

No. 76 in page 57 leave out lines 3 to 5 and insert—
'36. Neither section 141(2) of the principal Act nor section 10(1) of the Social Security Act 1980 (duty of the Secretary of State to refer proposals for regulations to the Industrial Injuries Advisory Council and the Social Security Advisory Committee) shall apply—'.[Mr. Newton.]

Order for Third Reading read.

[Queen's Consent, on behalf of the Crown, signified]

Motion made and Question proposed, That the Bill be now read the Third time.—[Mr. Rossi.]

Mr. James Molyneaux: I shall be brief but I wish, on behalf of my party and the people of Northern Ireland, to express our gratitude to the hon. Members for Pontypridd (Mr. John), Stockport, North (Mr. Bennett) and Wood Green (Mr. Race) for ensuring that the needs and the interests of the people of Northern Ireland were not neglected during the Bill's Committee stage. Those hon. Members, in the debates on clause 7, drew attention to the apparent intention to relate the value of payment to what was called the general level of prices obtaining in Great Britain. It was pointed out by the hon. Gentlemen that, although prices in Great Britain would provide a yardstick for the rate of payment mentioned in clause 7 and would apply that to Northern Ireland, apparently no account whatever was to be taken of the level of prices in Northern Ireland, which tends to be much higher than that in Great Britain. The absurdity was to be increased by the intention to introduce separate legislation for Northern Ireland. That legislation in all its essential parts would be identical to the text of the Bill that we are debating this evening but the scale would be related to prices in Great Britain, not in Northern Ireland.
The three hon. Gentlemen pressed that case, which happened to be our case, so effectively that the Minister of Social Security, who during his distinguished career in the Northern Ireland Office made himself fully conversant with all the special needs of the Province—and we are extremely grateful to him for all that he achieved during his period there—undertook to ask his advisers to examine and report on the point raised.
The hon. Member for Stockport, North has been kind enough to furnish me with a copy of the Minister's reply, which I gather has been circulated to other hon. Members who served on the Committees. In that reply the Minister explains that the uprating will be determined in relation to the general level of prices in the United Kingdom as a whole. For that we are very grateful. The Minister goes on to point out that there is not and never has been a price index for Great Britain alone, and I therefore assume that the draftsmen preparing the Bill for Great Britain alone decided to tidy up the operation and invent a price index for Great Britain alone. Presumably that is the reason for, and the history of, the reference to Great Britain in clause 7
But there is another far more fundamental point arising from the short debate on clause 7 in Committee. The hon. Member for Stockport, North said in Committee:
It is a farce to deal with Northern Ireland by secondary legislation."—[Official Report, Standing Committee B, 21 January 1982; c. 240.]
With that we heartily agree. The Minister remarked in defence that this was the way we had dealt with legislation for Northern Ireland for a very long time, and then he added very significantly "certainly since direct rule". The implication that the rubber stamp procedure was employed before direct rule was correct; the Minister was absolutely correct about that, particularly when it came to legislation such as the Bill that we are discussing. But the Minister reminded us that the principle of parity was being maintained throughout this Bill and he rightly referred to that as the traditional parity. Therein lies the lesson, because it was the acceptance of that principle of traditional parity that led Stormont Governments for over 50 years to repeat or ditto all such legislation. In those days it was done by Bill; now it is done by Order in Council.
The hon. Member for Stockport, North was right when he said that we were engaging in a farce, and we are participating in the same farce tonight when we complete this Bill for Great Britain and, at a latter stage, enact in one form or another the very same legislation, without an alteration to a dot or a comma, for that other part of the United Kingdom, possibly by secondary legislation.
I trust that right hon. and hon. Members will come to recognise the farce for what it is, and that this one and the same Parliament will cease to employ two entirely different methods of legislating for the same unit of the same United Kingdom.

Mr. Rossi: It is always a pleasure to follow the hon. Member for Antrim, South (Mr. Molyneaux). I am grateful to him for his references to my service in Northern Ireland for two years, which was a period of great privilege for me.
On the hon. Gentleman's question about the general level of prices and the wording of clause 7, I should explain that the Bill relates only to Great Britain because until it is implemented by Order in Council it cannot apply

to Northern Ireland. Therefore, references must be made to the general price level in Great Britain, but the practice in all legislation where levels of prices are automatically followed through in Northern ireland is that the United Kingdom retail price index is always referred to. So there was never any peril that the people of Northern Ireland would be disadvantaged in any way, notwithstanding what Opposition hon. Members may have whispered in the hon. Gentleman's ear. I made that perfectly clear in Committee and confirmed it in a letter to the hon. Member for Stockport, North (Mr. Bennett).
The hon. Gentleman raised the question of the form of legislation as it applies to Northern Ireland. Whether we should be legislating here directly for Northern Ireland, as I know is the view of some hon. Members who represent constituencies in Northern Ireland, or whether we should continue to do it by Order in Council is a path on which I dare not trespass. I know that the hon. Gentleman will forgive me if I do not follow him in a discussion of that matter, because of the vast constitutional implications.
I welcome the hon. Gentleman's intervention. The people of Northern Ireland have been fully protected. They will benefit from the Bill in every way, in the same way as the citizens of Great Britain will benefit.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 155, Noes 103.

Division No. 104]
[10.10 pm


AYES


Alexander, Richard
Fookes, Miss Janet


Alison, Rt Hon Michael
Forman, Nigel


Aspinwall, jack
Fowler, Rt Hon Norman


Atkinson, David(B'm'th, E)
Fox, Marcus


Beaumont-Dark, Anthony
Gardiner, George(Reigate)


Bendall, Vivian
Goodlad, Alastair


Benyon, Thomas(A'don)
Gorst, John


Berry, Hon Anthony
Greenway, Harry


Best, Keith
Griffiths, PeterPortsm'th N)


Bevan, David Gilroy
Grist, Ian


Biggs-Davison, Sir John
Gummer, John Selwyn


Blackburn, John
Hamilton, Michael(Salisbury)


Bottomley, Peter(W'wich W)
Hawksley, Warren


Bright, Graham
Heddle, John


Brinton, Tim
Henderson, Barry


Brooke, Hon Peter
Hicks, Robert


Brotherton, Michael
Higgins, Rt Hon Terence L.


Brown, Michael(Brigg&amp;Sc'n)
Hill, James


Browne, John (Winchester)
Hogg, Hon Douglas(Gr'th'm)


Bruce-Gardyne, John
Holland, Philip(Carlton)


Buck, Antony
Hunt, David(Wirral)


Budgen, Nick
Hunt, John(Ravensbourne)


Burden, Sir Frederick
Jessel, Toby


Butcher, John
Jopling, Rt Hon Michael


Cadbury, Jocelyn
Kellett-Bowman, Mrs Elaine


Carlisle, John(Luton West)
Knox, David


Carlisle, Kenneth(Lincoln)
Lang, Ian


Chapman, Sydney
Latham, Michael


Churchill, W.S.
Lawrence, Ivan


Clark, Hon A. (Plym'th, S'n)
Lawson, Rt Hon Nigel


Clarke, Kenneth(Rushcliffe)
Lee, John


Clegg, Sir Walter
Lester, Jim (Beeston)


Cockeram, Eric
Lewis, Kenneth(Rutland)


Cope, John
Lloyd, Peter(Fareham)


Cranborne, Viscount
Lyell, Nicholas


Dean, Paul (North Somerset)
McCrindle, Robert


Dorrell, Stephen
Macfarlane, Neil


Douglas-Hamilton, Lord J.
MacGregor, John


Dover, Denshore
McNair-Wilson, P. (New F'st)


Dunn, Robert(Dartford)
Major, John


Eggar, Tim
Mather, Carol


Fairgrieve, Sir Russell
Maude, Rt Hon Sir Angus


Faith, Mrs Sheila
Mawby, Ray


Fletcher, A. (Ed'nb'gh N)
Mawhinney, Dr Brian


Fletcher-Cooke, Sir Charles
Maxwell-Hyslop, Robin






Mellor, David
Speller, Tony


Meyer, Sir Anthony
Spence, John


Miller, Hal(B'grove)
Spicer, Jim (West Dorset)


Mills, Iain(Meriden)
Sproat, Iain


Mills, Peter (West Devon)
Stainton, Keith


Moate, Roger
Stanbrook, Ivor


Monro, Sir Hector
Stanley, John


Montgomery, Fergus
Stradling Thomas, J.


Morgan, Geraint
Taylor, Teddy (S'end E)


Morris, M. (N'hampton S)
Tebbit, Rt Hon Norman


Murphy, Christopher
Temple-Morris, Peter


Neale, Gerrard
Thomas, Rt Hon Peter


Neubert, Michael
Thompson, Donald


Newton, Tony
Thorne, Neil(llford South)


Page, Richard (SW Herts)
Thornton, Malcolm


Parris, Matthew
Townend, John(Bridlington)


Patten, Christopher(Bath)
Trippier, David


Percival, Sir Ian
Viggers, Peter


Pollock, Alexander
Waddington, David


Prentice, Rt Hon Reg
Waller, Gary


Proctor, K. Harvey
Ward, John


Rathbone, Tim
Warren, Kenneth


Renton, Tim
Watson, John


Rhodes James, Robert
Wells, Bowen


Rhys Williams, SirBrandon
Wells, John(Maidstone)


Ridley, HonNicholas
Wheeler, John


Rifkind, Malcolm
Wickenden, Keith


Roberts, M. (Cardiff NW)
Wilkinson, John


Roberts, Wyn (Conway)
Wolfson, Mark


Rossi, Hugh
Young, SirGeorge(Acton)


Shaw, Giles (Pudsey)



Shaw, Michael(Scarborough)
Tellers for the Ayes:


Shepherd, Colin (Hereford)
Mr. Robert Boscawen and


Silvester, Fred
Mr. Tristan Garel-Jones.


Skeet, T. H. H.





NOES


Ashton, Joe
Cocks, Rt Hon M. (B'stol S)


Atkinson, N.(H'gey, )
Concannon, Rt Hon J. D.


Bennett, Andrew(St'kp'tN)
Cook, Robin F.


Booth, Rt HonAlbert
Cowans, Harry


Boothroyd, Miss Betty
Craigen, J. M. (G'gow, M'hill)


Bradley, Tom
Crowther, Stan


Buchan, Norman
Cryer, Bob


Callaghan, Jim (Midd't'n&amp;P)
Cunliffe, Lawrence


Campbell-Savours, Dale
Cunningham, DrJ. (W'h'n)


Clark, Dr David (S Shields)
Dalyell, Tam





Davidson, Arthur
Marshall, Dr Edmund (Goole)


Davis, Terry (B'ham, Stechf'd)
Martin, M(G'gowS'burn)


Deakins, Eric
Mason, Rt Hon Roy


Dean, Joseph (Leeds West)
Maynard, Miss Joan


Dixon, Donald
Mikardo, Ian


Dormand, Jack
Mitchell, R.C. (Soton Itchen)


Douglas, Dick
Morris, Rt Hon C. (O'shaw)


Douglas-Mann, Bruce
Morris, Rt Hon J. (Aberavon)


Dubs, Alfred
Morton, George


Dunwoody, Hon Mrs G.
O'Neill, Martin


Eadle, Alex
Parry, Robert


Eastham, Ken
Powell, Raymond(Ogmore)


Ellis, R.(NE D'bysh're)
Race, Reg


Evans, John (Newton)
Radice, Giles


Ewing, Harry
Roberts, Albert(Normanton)


Field, Frank
Robinson, G. (Coventry NW)


Fletcher, Ted(Darlington)
Rooker, J. W.


Freud, Clement
Rowlands, Ted


Golding, John
Sever, John


Grant, George(Morpeth)
Silkin, Rt Hon J. (Deptford)


Hamilton, James(Bothwell)
Silverman, Julius


Hamilton, W. W. (C'tral Fife)
Skinner, Dennis


Harrison, Rt Hon Walter
Smith, Cyril(Rochdale)


Haynes, Frank
Spearing, Nigel


HomeRobertson, John
Stoddart, David


Homewood, William
Stott, Roger


Hooley, Frank
Taylor, Mrs Ann (Bolton W)


Howell, Rt Hon D.
Thomas, Dafydd(Merioneth)


Hoyle, Douglas
Thorne, Stan(PrestonSouth)


Hughes, Robert (Aberdeen N)
Tinn, James


John, Brynmor
Varley, Rt Hon Eric G.


Jones, Rt Hon Alec (Rh'dda)
Wainwright, R.(ColneV)


Jones, Barry (East Flint)
Welsh, Michael


Kilfedder, James A.
White, Frank R.


Lamond, James
Whitlock, William


Leighton, Ronald
Wilson, Gordon (Dundee E)


Lewis, Ron (Carlisle)
Winnick, David


Litherland, Robert
Woodall, Alec


McElhone, Frank
Wright, Sheila


McGuire, Michael(Ince)



McKay, Allen (Penistone)
Tellers for the Noes:


McNamara, Kevin
Mr. Ioan Evans and


McWilliam, John
Mr. Hugh McCartney.


Marks, Kenneth

Question accordingly agreed to.

Bill read the Third time and passed.

Orders of the Day — Pensions

The Secretary of State for Social Services (Mr. Norman Fowler): I beg to move,
That the draft Social Security (Class 1
Contributions Contracted—out Percentages) Order 1982, which was laid before this House on 3 March, be approved.

Mr. Deputy Speaker (Mr. Ernest Armstrong): With this we are to take motion No. 3 on the Order Paper:
That the draft State Scheme Premiums (Actuarial Tables) Amendment Regulations 1982, which were laid before this House on 3 March, be approved.

Mr. Fowler: The two statutory instruments to be debated are compact and have modest titles. The reports that I laid before the House and the Government Actuary's report laid with the statutory instruments reveal the true importance and technical complexity of the underlying issues. This is the first occasion on which we have reviewed the terms for contracting out of the earnings-related additional component of the State retirement pension scheme, terms that were embodied in the Social Security Pensions Act 1975, which took effect in April 1978. The revised terms take effect from 1983.
The 1975 pensions Act was a considerable political achievement. Under its provisions a partnership has been forged between the State and good occupational pension schemes. The partnership has a bearing on the pension rights of all employed persons directly or indirectly. About half the working population participates fully in the State scheme, but over 10 million employees are in occupational pension schemes contracted out of the State scheme. Occupational pension schemes had investments of about £50 billion in 1979, and currently the figure is more likely to be about £75 billion. About half this amount is invested in equities, and about a third in fixed interest securities. So, in short, we must recognise, first, that we are dealing with an important social issue—the pension rights of millions of people in this country—and secondly, we must recognise that pension schemes are a vital source of institutional investment.
The contracting-out arrangements have been a major success. The Government have re-affirmed their commitment to the partnership with occupational pension schemes and in reaching our decisions we have tried to ensure that that commitment is reflected in the revised terms. At the same time, our overall objectives have been to maintain stability and to treat all the parties fairly.
Perhaps I may remind the House of the history. The 1975 Act at last provided for substantial pensions related to earnings during working life. The State scheme provides a flat-rate pension for everyone who meets the contribution requirements. In addition, a substantial earnings-related pension will become available as the new scheme matures. But the difficulty was basically to ensure that these provisions worked in harmony with occupational pension schemes whose members already contributed to earnings-related pensions. Indeed, it is because occupational pension schemes got there first that the complex fabric of contracting-out arrangements evolved.
The overriding objective was plain enough. Good occupational pension schemes were to have the option to contract out of the earnings-related element of the two-tier State scheme. They would pay lower national insurance

contributions but would have to satisfy the Occupational Pensions Board of their ability to meet strict conditions aimed at safeguarding members' rights. Most importantly, they would have to guarantee a pension—the guaranteed minimum pension—broadly equivalent to the State additional pension. At the time it greatly troubled employers and their advisers that occupational schemes would be entering into an open-ended commitment as accrued rights would be related to future earning trends. There was also uncertainty about the future return from investments.
To allay those anxieties the Labour Government made important concessions on two fronts. First, they introduced a contingency margin by making the national insurance contribution reduction 7 per cent. rather than 6½ per cent., thus deliberately allowing a ½ per cent. for contingencies. Secondly they agreed to other safeguards that would apply when schemes had to buy back into the State scheme. In the first debate that I took part in from the Front Bench on the original pensions Bill, there was a great measure of political consensus. In Opposition we welcomed the concessions for which we and the pensions industry had pressed.
That is the background to the current review. Under the 1975 Act I have a statutory duty to review at least every five years the national insurance contribution reduction, which is the subject of the draft order, and the cost of buying back into the State scheme, which is the subject of the draft regulations. In August 1981, my Department issued a consultative document containing a technical analysis by the Government Actuary covering much the same ground as his report now before the House.
I shall concentrate on the contracted-out contribution reduction which is probably the most important issue, because of its impact on the overall viability of contracting-out. The Government Actuary's analysis shows that a contribution reduction of only 6 per cent.—a full 1 per cent. below the current 7 per cent. reduction—could be justified. But employers and the pension interests have with justification argued that their decision to contract out was based on the terms that Parliament offered. They argue that it would be a breach of faith to revise the terms in a way which eroded the original political concessions and the original political consensus.
There is a balance to be held. Employers with contracted-out schemes and the pensions interests would prefer an abatement to 6½ per cent. but would prefer to go no lower. Such an adjustment was expected because as the new arrangements mature a lower level of accrual has to be funded. However, some others like the TUC favour a 1 per cent. abatement to 6 per cent. They argue that the Government Actuary's analysis demonstrates that, if the reduction is more than 6 per cent., full rate contributors to the national insurance fund in effect subsidise contracted-out occupational pension schemes.
It is the basic duty of the Government to seek to maintain a fair balance between the interests of those who are participating fully in the State scheme and those whose pension rights are secured in contracted-out schemes. We saw a very real risk that if the contracted-out contribution reduction was to be set at 6 per cent., some schemes might cease to contract out or wind up completely. The hon. Member for Pontypridd (Mr. John) will confirm that that is a message from the pensions industry.
Future expectations could have been seriously affected. But there are other repercussions of a significant shift away from contracting out. There could be effects on the stock market as schemes sold investments to pay the national insurance fund for buying back. In the longer term the balance in the partnership between the State and occupational schemes could be upset. The level of institutional investment could be permanently depressed. And most importantly the State "pay-as-you-go" scheme would bear more of the burden for providing income in old age. We must also recognise that the funding of occupational pensions schemes results in substantial investment in British industry and such investment was never more vital than at present. All those considerations convinced me that it would be wrong to run the risk of significant switch to contracting back into the State scheme.
However, it is equally clear from studying the Government Actuary's report that a contribution reduction of 6½ per cent. would be difficult to justify because it would significantly improve the current terms for contracting-out and would diminish the cash inflow to the national insurance fund. That shortfall would have to be made good by full rate contributors, that is those not in contracted out schemes, and their employers.
The Government Actuary's report shows that for purely actuarial reasons the current overall' contribution reduction of 7 per cent. should be reduced by ¾ per cent. to 6¼ per cent. by ½ per cent.—because of the lower level of accrual, and by ¼ per cent. to reflect the actual age and sex mix in the contracted-out population. The 6¼ per cent. option is no better and no worse than the current terms. The most important feature is the contingency margin for the average scheme between the gain from reduced contributions compared with its costs of covering contracted-out commitments. With a 6¼ per cent. contribution reduction, the margin is 7·9 per cent. almost identical with the current margin. After carefully considering the Government Actuary's report and taking into account the arguments put forward by all the interested parties and our assessment of the wider issues, we have decided that the best balance is struck by abating the current contribution reduction of 7 per cent. by ¾ per cent. to 6¼ per cent.
I turn to the apportionment of the 6¼ per cent. between employer and employee. I make no secret of the fact that our final decisiions on this review were made in the run-up to a Budget in which we wished to help industry as well as individuals. We saw the opportunity to help contracted-out employers on a modest scale by sharing the ¾ per cent. abatement almost equally between employer and employee rather than in proportion to the present shares of 4·5 per cent. and 2·5 per cent. respectively. The result is that, of the ¾ per cent. extra to be paid by contributors, 0·4 per cent. will be paid by employers and 0·35 by employees. This means that the 6¼ per cent. reduction in the contracted-out rate will now be shared employer 4·1 per cent and employee 2·15 per cent. So I hope that employers will acknowledge that we have recognised their case as far as possible, given the need to strike a fair balance between the interested parties.
When we come to the changes in the buy-back terms contained in the draft regulations, the position is that contracted-out schemes may in certain circumstances

transfer their liabilities to the State scheme by paying premiums. A premium reading taken from the appropriate actuarial table is subject to adjustment by a device called the average market level indicator. That device was introduced basically as a political concession to protect occupational schemes which would have had to sell investments at the ruling market price to raise cash for premiums. It is clear from the Government Actuary's report, and it is generally recognised by those who contributed at the consultation stage of the review, that the present arrangement has persistently worked to the advantage of schemes and the disadvantage of the national insurance fund. The modification embodied in the draft regulations corrects the position, while at the same time maintaining the original objective. In the interests of stability the modification is to be phased in by five annual steps.
The occupational pensions schemes joint working group has written to me about the buy-back terms, to express some anxiety about the effect of the increase in buy-back premiums in the event of a serious deterioration in the investment market. The eventualities envisaged seem on the face of it to be fairly unlikely. Even if they did occur, they would not necessarily mean that any change need be made in the Government proposals for buy-back terms. That is because of the 12 per cent. earnings ceiling. Certainly there can be no cause for concern during the first two or three years of the phasing-in of the new arrangements. The joint working group offered to let me have fuller details of the difficulties that it foresees, and I shall of course be happy to consider them. Whatever they might be, there seems no reason to interfere with the Government's proposals during at least the early part of the phasing-in period, and I hope that the House will approve the instruments as they stand, irrespective of anything that might emerge from further representations. As I have said, if the joint working group will let us have further details of its precise misgivings, I shall be happy to consider them further, and if a joint discussion would be the best way of resolving doubts here I again would be happy to arrange that. The matter is fairly technical and it may be that the best way to proceed would be for the actuarial experts of the joint working group to get in touch with the Government Actuary to describe their technical worries. The Government Actuary tells me that he would also welcome that. Both I and my hon. Friend the Under-Secretary of State for Health and Social Security will listen carefully to anything further that is said in the debate on the matter.
In explaining our approach to the review, I have referred to the need for stability. The review comes only four years into the 20-year maturity period of the new arrangements. Our aim has been to maintain confidence in those arrangements. I have acknowledged that the 1975 Act was a considerable political achievement and I referred to the spirit of co-operation which existed between the main parties when the original terms were settled. I have no wish to disturb that consensus. But above all I ask the House to recognise that the decisions that we have made take into account the interests of all affected parties and seek to strike a fair balance between them.

Mr. Brynmor John: These are fairly technical orders, but it would be wrong to fail to recognise


the effect that they have on many millions of people who pay into these pension schemes and therefore benefit from them. Their social content is thus quite high.
I shall take the points that I want to make in the rough order in which the Secretary of State made them. I shall deal first with the contribution reduction. As the Secretary of State said, the current contribution reduction for contracted-out pension schemes is 7 per cent. which was ½ per cent. above the Government Actuary's calculations, when the Bill was introduced in 1975. That was to take recognition of the risks that the occupational pensions schemes then felt that they ran.
That is important because we are seeing a continuation of anxieties. Whatever contribution is suggested, the pensions industry feels anxious about it and points out difficulties. I hope that the Secretary of State, in saying what he has about consultations, will also make it clear to the pension schemes that some of these matters were taken well into account and the difficulties were understood and were, in the event, found to be exaggerated.
The Government Actuary explains in the new report that from 1983 to 1988 we could see a cut by about 1/2 per cent. because of the fall in the average rate of accrual and by a further ¼ per cent. because of new information about the age and sex distributions of those in contracted-out schemes. This means that the neutral figure that the right hon. Gentleman has fairly put is 6¼ per cent. and not, as the press has said on some occasions, 6½ per cent. Therefore, the figure that the actuary has come up with is a neutral one, but it means that the pensions funds have scored a considerable success.
I express my disappointment by pointing out that the Government Actuary argued for a reduction of the 6 per cent. because the 1978–83 figure had incorporated a contingency margin of 7·7 per cent. to cover risks. However. during the passage of the Bill—this seems to have been largely ignored or has passed unnoticed by the pensions funds—two safeguards were introduced, or one safeguard and one development. These have made it rather clearer that they are protected. One is the availability of index-linked Government schemes, which now reduce the risks of the pension schemes. The margin of contingency risk that the actuary thought was ample to cover the risk was 4·2 per cent. That is why he suggested his figure when he raised it as the basis of his report.
What has happened is that in the new fund, as the actuary says in paragraph 48 of the report, the contingency margin is now not 7·7 per cent. but 7·9 per cent. for risk. That is increasing the contingency margin, and when we are talking about 0·1 or 0·2 per cent. we are talking about a considerable sum of money.
The Government Actuary said that the further safeguards appear to have removed the principal risk attaching to contracting out, which led the Government at the time to increase the contribution from 6½ per cent. to 7 per cent. The Government Actuary has suggested that the figure could easily be 6 per cent. with a reasonable contingency margin that was ample to deal with all events. The 6¼ per cent. seems to be a compromise between the Government Actuary's figure, backed by the TUC, and the 6½ per cent. of the pension industry. It is a truly political compromise. I am sure that the right hon. Gentleman will not necessarily take offence at that remark.
If there has been a splitting down the middle, which in effect will give the pension funds a substantial advantage over the next five years, I hope that he and it will remind themselves of that.
I have talked about the large sums which are involved in even marginal changes. It was estimated in an article that appeared in the Financial Times on 4 March that an extra ¼ per cent. is worth £125 million to the pension industry. As it is to be 6¼ per cent. instead of 6 per cent., the pension industry will gain £125 million.
The Financial Times article states:
That the private pension schemes have negotiated this hurdle so comfortably now adds to the responsibility upon them to make rapid progress in the areas—notably indadequate transferability and lack of inflation proofing—in which their deficiencies are becoming increasingly serious.
Part of my disappointment is that unless the private pension funds are to move fairly swiftly to make up the grotesque losses that occur when a man switches jobs, and to meet the failure, almost abysmal in many instances, of pension schemes to maintain their value against inflation, the advantages that are being fed to them quinquennially will ring hollow in the ears of those who are their beneficiaries and who look to the pension schemes to produce pensions that will keep them in a reasonable standard in retirement.
The way in which the 6¼ per cent. is divided means that there is a mildly regressive shift of the burden from employers to employees. The existing contribution reduction is split 2½ per cent. to 4½ per cent. between employees and employers. The 6¼ per cent. is 2·15 per cent. to 4·1 per cent., and that worsens the position of the employee by 0·1 per cent. For a person in receipt of average earnings and, therefore, on earnings above the lower earnings limit, this might mean a further £1·25 a week, Taken with the shift that the Government have made on national insurance contributions to raise only employees' contributions, the result is that the employee is suffering from a disguised tax that does not bear on his employer.
I fear that the precedent that has been set this year will be used as a precedent for further shifting the balance against the employee and in favour of the employer in subsequent years. When the Minister replies, I hope that he will reassure the House that whatever has been done in the short term, in the light of the most severe recession that we have ever experienced, will not be taken as a precedent to worsen the terms for employees. The Government should realise that they already feel aggrieved that national insurance contributions are being used to impose a disguised tax upon them. If they find that the contracting out provisions are being used to shift the burden to them as well, they will feel extremely angry, and that will sour. the relationship within the scheme.
My third point concerns the market level indicators. I think that the Secretary of State was right to skate around the intricacies of the scheme fairly niftily today am sure that none of us will go too deeply into it as none of us understands fully what has happened. That is part of my criticism of the Government's scheme. They have chosen the most complicated version, as I hope to show.
We have to take account of the short-term fluctuations in the market values of the investments of the schemes, but the Government Actuary stated in his memorandum last July that the present arrangement is actually too favourable to contracted-out schemes, as I think is generally accepted.


He then suggested in paragraph 63 a fairly simple amendment to the present arrangement. He said that the figure should be divided by 85 before multiplying it by the market level indicator. That may not sound the simplest scheme in the world, but the Government's suggestion, that if the figure derived from the existing formula is less than 105 the new indicator will be half of that figure plus 52½, makes the Government Actuary's suggestion sound like child's play.
My criticism is, therefore, that the Government have adopted a far more complicated formula which involves phasing in over a full five-year period. I do not believe that that is desirable. It would be better to make a simpler change now and achieve it at once in these orders rather than perpetuate the problem by phasing in over five years so that in 1988 we have to face the fact that a simpler formula must be found. This certainly is not such a formula.
Finally, I am extremely disappointed at the treatment of early leavers. As I have said before, one of the great deficiencies of occupational pension schemes is the wholly inadequate provision for transferability, in which early leavers are heavily involved. It is estimated that the average time spent in a job is 10 years, which on a very conservative calculation means four or five jobs in the average person's working life. What is the Government's estimate of the number of people who will not be early leavers from some pension scheme or other at some time during their lives? In other words, how many people will start in a particular job and pension scheme and remain in it for the whole of their working life? I would not mind betting that it is a fairly small proportion.
That highlights the importance of the treatment of early leavers, because if the provision is inadequate people changing jobs will face not only the trauma of changing jobs but the injustice that they now often feel of having to lose on their pension schemes. It is most disappointing that the Government have not taken the oportunity of this quinquennial review to make the changes called for by the Occupational Pensions Board report. That report, dated 24 June 1981, states:
The Board observed that early leavers in private sector schemes often suffer a substantial loss of pension rights because their pensions are based on the salary at the time of leaving without allowance for changes in prices or earnings levels in the period between leaving and retirement age. The Board recommended that in principle early leavers should receive the same benefits for their years of pensionable service as their fellow members who stay in the same employment to pension age.
That is a real difficulty to which the Occupational Pensions Board drew attention last June. Nothing has been done about it in this order, and the Government have missed a great chance.
The second point which the Occupational Pensions Board has raised is the question of franking, and that can be explained by quoting paragraph 2.21 of its report:
The practical effect of revaluing the GMP"—
which for this purpose is not the GNP but the guaranteed minimum pension—
is reduced in many schemes, since it is permissible to use other scheme benefits, arising from service both before and after the implementation of the 1975 Act in April 1978, to satisfy the GMP test. Thus, unless the revaluation of the GMP takes it above the level of what would otherwise be the total scheme benefit, the scheme need not adjust the total.
It goes on:

At present there is considerable scope for franking, since GMPs relate only to service since April 1978. As, in the course of time, the GMP becomes a larger proportion of leavers' total benefits, so the scope for franking will be reduced.
What the Occupational Pensions Board recommended, and what I would call upon the Government to ensure, is that the practice of franking benefits should change. I believe that it could be done quite easily. It would add to the sense of justice which the recipients of occupational pensions scheme feel, and I believe that the Government should have taken this opportunity to do this. If not, I call upon them to take the earliest possible opportunity to bring before the House a scheme which would outlaw this practice and make it obsolescent. Otherwise, as I have said, what the Government are doing is exposing the admittedly large numbers of members of the occupational pensions schemes to a basic injustice which the schemes themselves seem unable to remedy.
Therefore, my final word on this matter is to express my sincere regret that the Government have not tackled this matter so far and to hope that they will do so in the very near future.

Mr. R. A. McCrindle: Considering that the subject matters of these orders affects millions of people, one might have hoped that we would have been having this debate in a packed House, riveted by the nuances of the debate. Clearly this is not so, and perhaps at 10.57 pm it is too much to expect; although I have an uncomfortable feeling that even if we had been having the debate at 4.57 in the afternoon the attendance on these important matters might not have been materially different.
Nevertheless, there is a small but dedicated band of hon. Members on both sides of the House who recognise the real complexity of these matters, and equally recognise the great importance that what we do in this House should be right. Upon whether we do so depends the future of a great many of our fellow citizens. The decisions we reach here this evening must be seen against the background of continuing encouragement to the development of good occupational pensions schemes.
I was pleased that the Secretary of State, almost at the beginning of his speech, reminded the House of the partnership that has developed over the last few years between the national scheme and good occupational pension schemes. Although it is now very easy to assume that this has always been so, one has only to cast one's mind back about a decade to recognise that the propensity of hon. Members on both sides of this House to engage in what was called "pensioneering" was such that one move forward by one Government in this field was calculated to be reversed by their successor. It is greatly to the credit of both Front Benches that some years ago a truce was called. While a national scheme was unfolding, encouragement was given to the development of good occupational pension schemes. Looking back over a few years, there can be little doubt that the country has benefited greatly from an end of the blatant "pensioneering" to which hon. Members were formerly subject. If we have proved anything, it is that a role exists for the national scheme and for occupational pension schemes. Long may that situation continue.
It is perhaps appropriate to suggest that the contracting-out provisions, since the scheme was introduced, have


been a success. One has seen the development of occupational pension schemes at the same time as the national scheme has been unfolding. The question to which one must immediately address oneself is whether the new rebate proposed in the first of the statutory instruments under discussion is fair and reasonable if occupational pension schemes are to operate and to prosper and if they are to be given the continuing encouragement that, it seems to me, was part of the deal to which I have already referred.
Unlike the hon. Member for Pontypridd (Mr. John), I would have thought that the balance that the Secretary of State has struck—this could not have been easy when one recalls the conflicting pressures that were upon him from both sides of the equation—is fair and reasonable. Pension interests have long understood that the 7 per cent. that has applied until now was intended to apply for only about five years. Now that the first period is over and the Secretary of State is duty bound to review the situation, I believe that the compromise figure that he has reached is not unreasonable.
Apart from the acceptance by most people in the pensions industry that the 7 per cent. was likely to last for only five years, I seem to recall being told—I had more than a passing interest in the progress of the Bill through Parliament in the mid-1970s—that it would reduce not from 7 per cent. to the 6·25 per cent. now being discussed, but to something like 4·5 per cent. over a period of 30 years as higher accrual rates or past service element ran out of the pension schemes. No one can have been surprised that there had to be a change. In all the circumstances, I think that the 6·25 per cent. decision that my right hon. Friend has reached is probably, on balance, about right.
The 7 per cent. that was permitted in 1976 took into account some of the uncertainties that could not be resolved because we had no experience of the new scheme. These uncertainties meant that assumptions had to be made with regard to the sex, age and earnings distribution. I do not deny, as I think the hon. Member for Pontypridd has remarked, that it has proved attractive for many contracted-out schemes. I do not regret the fact that this has turned out to be the case. It has established on a good footing the new partnership between the national scheme and the occupational pension schemes. I welcome that.
But now that we can turn our attention to the actual sex, age and earnings distribution rather than an assumed one it seems that a case could be made, as indeed the pensions interests did to my right hon. Friend, that 6·5 per cent. might in these circumstances be a rather fairer percentage if one is to be seen to be giving the continued encouragement to private occupational pension schemes, which I feel sure is part of what my right hon. Friend is trying to do.
I judge that, although the private pensions interests would have preferred 6·5 per cent. they are certainly not going to find it impossible to live with 6·25 per cent. On the other hand, if they had been obliged to accept the 6 per cent. that the hon. Member for Pontypridd was seeming to wish upon them just a few minutes ago, that would have brought some potential challenge to the continuance of the partnership to which I have turned my attention on several occasions already during this speech. I believe that there would have been a danger that if it had been brought down to 6 per cent. there would have been an attraction for some of the contracted-out schemes to contract in again, and,

although that would not have been a disaster, it would have had an adverse effect, in my judgment, on the continuing partnership on which I have laid some stress.
So, of course, it is a political compromise, as has been said. I do not see that that was a wrong thing for my right hon. Friend to do. When the hon. Gentleman turns his attention to transferability and early leavers, I believe that if there is any continuing benefit over what he would have wished in making it 6·25 per cent. rather than 6·6 per cent. it is in enabling occupational pensions schemes to turn their attention in a way which I agree they have done inadequately so far to the whole perplexing question of early leavers and transferability.
The more I study the matter of early leavers—and I have probably done it as much as most Back-Bench Members—the more fraught with enormous difficulty I see it to be. At the end of the day we shall achieve what we want only if somebody is prepared to pay for it. I am not saying that there should not be a contribution, possibly as a result of the difference between 6·25 per cent.—and 6 per cent.-and how much more if it had been 6·5 per cent., which was part of the point I was making a few moments ago.
The really fundamental question to which I think that the House must on another occasion address itself—although my hon. Friend the Under-Secretary may care to make a passing reference to it—is whether, when we do turn our attention to transferability, the responsibility lies fundamentally with the pension schemes themselves to introduce a measure of transferability and provision for early leavers, or whether there is really an argument for Government legislation requiring that it be done. I make no secret of the fact that I would infinitely prefer the former course that the pension schemes should recognise that the social pressures upon them to move in this direction are such that they would be well advised to look at ways of achieving that objective. However, if the pensions schemes cannot or will not do this over a period, which I suppose I would put at no more than five years, I genuinely believe that there is a case for whichever Government is then in power to turn their attention to enacting this by legislation.

Mr. John: Will the hon. Gentleman also recognise that the preservation of the pensions against inflation is inadequate in many private schemes and would he extend the point he has made about transferability by dealing with that point as well, which he can do much more easily since it is not as difficult?

Mr. McCrindle: I am happy to respond, although I do not wish to make a long speech. As the hon. Gentleman will appreciate, it is not the simplest of subjects. Therefore, I shall restrict my response to saying that I have yet to discover an investment that any pension scheme could have made that would have returned 29 per cent., the level that inflation reached during the period when the hon. Gentleman served in the previous Government. Therefore, it is not simply a question of saying "Let us have pension schemes index-linked". It is a matter of recognising that unless there is an investment available to cover index-linking it cannot be done.
The present Government, unlike the hon. Gentleman's Government, have taken steps—admittedly modest—to introduce index-linked stock. Many of my hon. Friends do not particularly like that development. I welcome it,


because I believe that it is a step in the direction of giving some index-linked protection to members of private pension schemes in the same way as it is now extended to those in public service pension schemes.
I hope that the hon. Gentleman will forgive me if I say no more on that wide subject but turn my attention to the buy-back terms, a safety net facility introduced in case changes in the investment situation were such that a private scheme became unable to meet its liabilities. The terms are to be stiffened, according to the regulations. Many pensions interests are unhappy about the arrangements that we are discussing.
The increase in the buy-back premiums is from 51/½ per cent. in 1983–84 to 27 per cent. in 1987–88. Therefore, by any reckoning, the safety net that was represented by this facility being introduced into the 1975 Act is being progressively diminished. There are employers as well as pensions interests who are alarmed that that should be so. There is a feeling that the tendency to take the line of least resistance and to contemplate contracting-in will be encouraged by the terms, and that that would be bad for the partnership to which I have referred.
I received today a letter from the Life Offices'
Association, in which the association says:
Even although the changes are to be phased in over 5 years, "—
a point that my right hon. Friend said should allay the fears—
they could have an immediate effect on the numbers of employees who are contracted-out because some schemes may wish to buy back now rather than expose themselves to the risk of having to pay higher premiums later.
My right hon. Friend must turn his attention to that genuine fear expressed by a responsible body.
The association also says that it sees no reason why my right hon. Friend should not have agreed, or should not even now agree,
to defer the implementation of the revised buy-back terms pending further discussion.
Of course, this will be seen as special pleading by an organisation with more than a passing financial interest, but I hope that Opposition Members will concede that it also has more than a passing interest in getting the matter right, in the interests of the millions of people who are involved in these matters.
It is not only the Life Offices Association that has indicated some unhappiness. I have here a copy of the letter to which my right hon. Friend referred, from the occupational pension schemes joint working group. The letter, dated 12 March, represents the views of the Association of Consulting Actuaries, the Life Offices Association, the Associated Scottish Life Offices, the National Association of Pension Funds and the Society of Pension Consultants—so far as I am aware, all the leading pensions interests.
The principal point made by those bodies is that although they recognise that the terms must be changed they have a feeling that the way in which they are being changed, and the terms under which they are being changed, may put some of the occupational pension schemes in some difficulty. They have permitted me to quote the following paragraph:
We have recognised that the present terms may be considered generous when measured against the interest rates of the past four years and, if so, there are therefore grounds for their

amendment. However, the revision now proposed fails to achieve the original objective of protecting a fund which has to realise assets in adverse market conditions.
They further state that it is a matter of urgency that there should be some discussion, perhaps even as to the speed with which these terms are introduced. The House is clearly anxious to know whether the terms we are discussing are approved and whether they close the door completely. As the Secretary of State said, if they give a note of their precise misgivings, not only can discussions take place but, conceivably, a change in the order might ultimately occur, presumably requiring a further statutory instrument to be presented to the House at a later date.
The spirit of co-operation that my right hon. Friend the Secretary of State properly referred to would be seen as being rather more in operation by this impressive group of people, who have expressed concern, if the Minister were able to tell me this evening that the Government would be prepared, not just to have discussions in response to the precise misgivings being spelt out—they appear to be fairly well spelt out in the attachment to the letter of 12 March—but, if the case can be proved, to say that it is not too late to consider an alteration of the terms.
The instruments under discussion certainly do not sound the death knell of occupational pension schemes—far from it. However, encouragement continues to be required if we are to maintain this partnership. The industry is perfectly prepared to accept a reduction of the rebate to 6·25 per cent., but it is alarmed at the buy-back terms and the steepness of the rising burden over five years.
I sincerely suggest to my right hon. and hon. Friends on the Front Bench that further discussion should be embarked on to see whether we can extend the period or modify the velocity. Please could we have some further discussions of any sort? Government support for the occupational pensions industry is as important in the next five years as it has been in the past.

The Under-Secretary of State for Health and Social Security (Mr. Tony Newton): It was borne in on me fairly early after arriving in the House, or so it appeared, that there were two sorts of people in the world; those who had served on the Standing Committee for the 1975 Act and understood it and those who had not and did not. It took me a little while to realise that there was a third group of people—those who had served and still did not understand. It has been all too clear this evening that there are none of the latter people in the Chamber. Indeed, the hon. Member for Pontypridd (Mr. John) and my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) have displayed formidable expertise in some of the intricacies of this scheme and I will do my best to comment on the points they have raised.
I much welcome the tone that this short and limited debate has taken, because underlying it has been the thing that the Government certainly—I know I speak for my hon. Friend the Member for Brentwood and Ongar—consider the most important aspect in the whole argument, that we should maintain the basic consensus which underlay the 1975 Act and carry it through. As both my hon. Friend the Member for Brentwood and Ongar and the hon. Member for Pontypridd said, at the end of the day—literally at the end of the day—we are talking about the rights in retirement of million upon million of fellow


citizens; rights which will go on being built up for decades. Their interests are primarily that we together—both sides of the House—maintain some stability and do not upset the building up of those rights and their security of a reasonable income in retirement. Considering some parts of political history in the past decade, it is a minor miracle in many ways that this degree of consensus has been built up and maintained. Ministers are very anxious to sustain that miracle.
Two principal issues have run through our debate tonight, and the hon. Member for Pontypridd injected a number of other issues, on which I shall touch in a moment. The first of the two main issues is the argument about the 7 per cent., 6½ per cent., 6¼ per cent., 6 per cent. There is not much that I can add, except perhaps to say that if my right hon. Friend wants 6½ per cent. and the hon. Gentleman wants 6 per cent. we may be about right in deciding on the 6¼ per cent. figure. There is no conclusive way in which we can prove that that was the right judgment. It was not an easy judgment for my right hon. Friend, but it was the one that he made, after careful consideration.
I come fresh to the matter, and having looked at the papers during the past few days, I too, concluded that it was probably the right compromise to reach. The hon. Gentleman spoke as though this almost enhanced the advantage of the contracted-out schemes. We see it as maintaining the status quo in terms of the balance between the contracted-out and the not contracted-out schemes. That contingency margin—the gain from the reduced contributions, as against the cost of covering the commitments of providing the pensions—is very close to what it was under the previous arrangements. That is probably the best test of neutrality in what we are doing.

Mr. John: I suggested that because, in retrospect, it now looks as though the 7 per cent. initial allowance was over-generous, for a number of reasons that we all understand, and that therefore a neutral figure on this occasion perpetuates the advantage first given.

Mr. Newton: I accept what the hon. Gentleman says. I respond by echoing what my right hon. Friend the Secretary of State said in his speech. At the very least, we are concerned not to move in a direction which runs the risk of upsetting the existing balance and of causing a flow of contracting in, with the possible effects that that might have on the stock market and on investment by institutions generally. We face a difficult economic situation, even though some of us hope and believe that it is getting better, so this is not the time to run the risk of disturbing our great investment institutions or of undermining the arrangments which have served the schemes, the country, and the prospective pensioners pretty well over the past few years. Again, that strengthens the case for my right hon. Friend's judgment. The hon. Gentleman is right to say that this is, using the word in its best sense, a truly political compromise. He and I both use the word in its good sense, and that in itself is a form of justification.
I want to take up the four further points that were raised by the hon. Member for Pontypridd and by my hon. Friend the Member for Brentwood and Ongar about early leavers, transferability, franking, and the preservation of pension rights. Although this debate does not relate directly to those issues, which are covered in the Occupational Pensions Board's recommendations in its early leavers

report, we are considering as a separate matter what was said by the board in its report. I hope that the institutions and organisations involved in these matters outside the House will have noted what was said both by the hon. Gentleman and by my hon. Friend. It is not for me to attempt to lay down the law tonight in a debate which is on the separate issue of the order and the regulations. The hon. Member for Pontypridd and my hon. Friend the Member for Brentwood and Ongar put their points forcibly and I have no doubt that they will be registered by those concerned outside the House.
I turn to percentage contributions and to what has been said about the possible implications of the way in which we have drawn the balance between employers and employees in dividing up the change. I am not sure that I understood the point correctly, but it seems to be suggested that the figures that we produced—which meant a reduction of 0·35 per cent. for the employee and a slightly larger reduction of 0·4 per cent. for the employer—could create a contributions increase for the employee of about £1.25 per week. I understand that a change of 0·1 per cent. would mean 12p a week on earnings of £150 per week.
We may need to explore the discrepancy in the advice, but I am advised that the change postulated of 0·1 per cent. would mean a contribution increase of 12p per week on earnings of £150 per week. I echo my right hon. Friend the Secretary of State in saying that we propose a marginally larger reduction for the employer than for the employee. That should be seen in the context in which we, and many Opposition Members, accept that one of any Government's prime concerns must be to give every possible assistance to industry, by maintaining the viability and expansion of firms, and the provision of new employment and new opportunities for employment. That is partly why we thought it right to ensure that we were not adding any further penalties for employers that could be avoided.
That is the spirit in which my right hon. and learned Friend the Chancellor of the Exchequer approached his Budget proposals and it is also the spirit in which my right hon. Friend the Secretary of State has approached the difficult decision that he had to make.
I shall comment briefly on some of the observations made about the buy-back issue. From the representations made by those outside the House and from the remarks made tonight, it is clear that at the very least it is generally agreed that the buy-back formula, as it has been operating, is fairer than originally intended to those contracted out, and therefore less fair than originally intended to the national insurance fund. Therefore, there is no great dispute about whether some move needed to be made or about its direction. In the light of the advice that we received from the Government Actuary, my right hon. Friend made the decision embodied in the regulations before the House. We do not believe that some revealed truth has been granted to us and that we are right beyond peradventure. We have not closed the door on any further consideration of the arrangements.
Some of the suggestions about the possible effects are exaggerated, given some of the built-in safeguards. y right hon. Friend the Secretary of State referred to the 12 per cent. limitation. In our judgment, that is about right. However, my hon. Friend the Member for Brentwood and Ongar asked a question and I hope that my right hon. Friend has reassured him sufficiently on that point. We are


ready to listen to further representations about the formula, to consider alternative proposals, and, if we are persuaded, to consider what to do. At present, we would be very reluctant to follow a path that would lead to considerable uncertainty for those inside and outside industry and to say that we shall not proceed with the regulations.
It has long been understood that after the review it was necessary to pass new regulations by April this year so that they could start to come into effect in 1983. There has been extensive consultation and my right hon. Friend has made his judgment. At present, we feel that it would be wrong to upset the process that has been set in hand and which is proceeding one further stage through the House tonight.
I hope that those outside will recognise that, just as we proceed in good faith, believing that it is now the sensible thing to do, so we also repeat in good faith our offer to listen, to consider any representations that are made—above all any specific suggestions for alternative ways of dealing with this problem—and, if persuaded, to consider what action we might take. Of course, I say that without any commitment at this stage. In other words, we are not closing the door, but for the moment we feel it right to proceed.
It has been clear to me, even on a relatively brief but deep involvement in these matters, that it is a great deal easier in this area for people to agree that they do not entirely like what is presented to them than to decide on precisely a better way of doing things. If for no other reason, and against that background, I hope that the House will pass the order and the regulations this evening.

Question put and agreed to.

Resolved,
That the draft Social Security (Class 1 Contributions—Contracted-out Percentages) Order 1982, which was laid before this House on 3 March, be approved.

PENSIONS

Resolved, 
That the draft State Scheme Premiums (Actuarial Tables) Amendment Regulations 1982, which were laid before this House on 3 March, be approved.—[Mr. Fowler.]

Orders of the Day — Nissan Project

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thompson.]

Mr. Hal Miller: I am grateful for the opportunity of raising some of the questions posed by the Government's announcement more than a year ago now of the Nissan project—a plant on 800 acres to produce some 200, 000 cars a year and employing up to 5, 000 people. I am glad that my hon. Friend the Member for Maldon (Mr. Wakeham), the Under-Secretary of State for Industry, will reply, in view of his wide business experience including, I believe, several motor dealerships and his continuing interest in industrial and commercial problems.
There has been widespread public interest in this Nissan project, but also widespread uncertainty about its progress to date—we have only to think of recent articles in the daily, Sunday and weekly press. Since the original statement, there has been no chance of debating the issues in this Chamber—there have been only a series of

parliamentary questions eliciting, I fear, but scant response from the Government. I cannot say that I expect much more progress on that front tonight.
The issues are important and should be raised. Although I believe the project itself to be at least as far away as the originally announced target of 1984 to 1986, judging by the fact that British components have yet to be homologated—that is, tried, tested and put in production models—that a plant must take two to three years to build, and given the probability that the Japanese would wish to introduce a new model in this country, which must be about four years away, none the less I shall be asking that every effort be made to announce an early decision on this project.
Indeed, if one considered the calls of the official Opposition for withdrawal from the EEC and the introduction of planning agreements, despite the experience at Chrysler, that would merely add more force to my argument for early progress. However, I know that Labour Back Benchers are falling over themselves—from Newcastle to Neath, from Fife to Flint—to secure this plant. I draw comfort from that activity, which leads me to suppose once again that there is no chance of official Opposition policy being put into effect, whatever the result of the election.
Although I have previously described this project as a potential Trojan horse, let me say at once that I welcome the prospect of inward investment accompanied by the transfer of technology from Japan. The importance of Japanese investment is highlighted by the continuing and increasing imbalance in EEC trade with Japan, which is currently a major political problem. Throughout the EEC Governments are faced with unemployment and the need to expand trade.
United Kingdom interests are much the same as those of Japan. We are both island people. We are both heavily populated. We both depend on manufacture and export to sustain our standard of living. But Japan's concentration on exports in limited lines and the difficulties facing imports into Japan have resulted in unemployment and a mounting adverse trade balance. In Britain we think of motor cycles, zip fasteners, ball bearings and television tubes. Now the motor industry is threatened. The United Kingdom market is at present particularly attractive to importers, at a time when our industry is still largely uncompetitive and the exchange rate favours the importer.
To compete, our industry needs more investment in assembly and components and in improved technology. That is why I believe that the Nissan project should be welcomed. But safeguards are needed to ensure that technology is transferred, new jobs are created and Government aid is not spent to the detriment of private firms and other Government-aided projects.
There has been much talk of conditions stipulating minimum local content, minimum exports, changes in the current SMMT-JAMA voluntary industry arrangement and import substitution. It is unreasonable to expect the Japanese to agree to more discriminatory conditions being applied to their project and the provision of Government aid than were applied to other multinational investors and projects.
Equally, the Japanese should understand what is expected of investors here with regard to local activity. I believe that the difficulties can be met by clear understandings about the inclusion in the Nissan project of local manufacture of the complete drive train within three


years of start-up and on the percentage of local production to be exported. Indeed, I am sure that prospects for exports to the rest of the EEC depend largely on the extent of local content in the product.
I welcome the fact that the BL/HONDA Acclaim has been passed for import into France and Italy. But the project is on an entirely different footing from the Nissan project, and should not be taken as an example that could be safely followed by a much stronger competitor with a much stronger financial base and a stronger product range.
There is a fear hanging over the European industry because the Japanese motor industry already produces 7 million cars as against a domestic market of under 3 million. It is thought that that capacity is being extended by a further 3 million vehicles. With the American market closed and our already concluded voluntary industry undertaking, there must be concern as to where the additional volume of production will be sold, especially as signs are already appearing of a downturn in the Japanese market.

Mr. Anthony Beaumont-Dark: I had an Adjournment debate on a similar issue in June 1980, when we got rather short shrift for the idea that we would come to an understanding with the Japanese. Does my hon. Friend agree that understandings have proved not to be enough and that we must have firm agreements? If his figure is right about an excess capacity of 3 million to 4 million cars, the Japanese will sell those in any way that they can. If our industry is not to be destroyed, in the Midlands especially, does my hon. Friend agree that we must have a firm agreement, not an understanding, or we shall become a Meccano factory instead of a car-manufacturing enterprise?

Mr. Miller: My hon. Friend is very perceptive and has the interests of the West Midlands at heart. I was choosing my words carefully because of the need to avoid over-discrimination against Japanese multinational companies investing in Britain. However, what my hon. Friend said reinforces the need for a clear understanding about the basis on which this project can be allowed to proceed.
In that connection, I point out that the unofficial industry arrangement—rather than agreement—has been observed. Although I broadly welcome the inward investment and the transfer of technology, safeguards are needed and I shall come to that aspect shortly.
I was referring to the concern throughout not only the EEC but the rest of the Western world about the apparent increase in Japanese production capacity, despite the appearance of a decline in the Japanese market. That may be one reason why the decision has been delayed, because of difficulties of convincing the Japanese unions that there will not be a cut in Japanese production if there is a substantial production investment in Britain. I urge on the Japanese the need to consider carefully the political background to the decision. My hon. Friend has just referred to one aspect. I referred earlier to the political unacceptability of the continued imbalance in trade. There is a need for early action.
The Nissan project raises once again the question of the direction of Government aid. Aid to motor industry projects should be examined on the grounds of the needs and opportunities of the motor industry and should not be based on the location of the various plants. Our industry has suffered too much already from the operation of

regional policy and we need only think of the forced direction of expansion in Merseyside and in Scotland, with such tragic results that are now much discussed. Investment decisions have been distorted by our aid policy, and the West Midlands especially has been denied new projects and new skills. We have been locked into a shrinking industrial structure with declining opportunities and prospects. We have been discriminated against to the extent that we have the highest rising rate of unemployment in the country and higher absolute unemployment than Glasgow or Liverpool. That is why I say that safeguards are needed.
An early announcement would be in the interests of all concerned. Other manufacturers are in the process of launching new and increasingly expensive models. They and the component makers need to know where they stand. The Government and their EEC partners need firm evidence of Japanese intentions to do something positive about the overwhelming imbalance in trade. The British people need reassurance about the project's implications for jobs.
In my opinion, the Japanese would be well advised to take advantage of the present favourable climate for the project, which may not continue for ever. Therefore, I hope for an early and positive decision.

The Under-Secretary of State for Industry (Mr. John Wakeham): I recognise the long-standing interest of my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) in the motor industry in the United Kingdom. He has raised several important points about the possibility of Nissan coming here, and I welcome the opportunity to explain how the Government see the position.
I am afraid I shall not be able to be as forthcoming with the House about the details of this project as I might normally like to be. But the House will understand that I really cannot go into details on the company's proposals at this stage. Discussions between the Government and Nissan are still going on, and this is obviously a matter of great commercial sensitivity to the company. While I shall do my best to cover the general issues raised by the Nissan project, I hope that the House will forgive me if occasionally I come up against quite proper commercial inhibitions. Many hon. Members will know how difficult it is to discuss commercial negotiations without seeming completely unhelpful. I certainly hope not to do that.
We need to look at the possibility of Nissan coming to the United Kingdom from several angles. First, there are the general arguments about a major inward investment into the United Kingdom. Then, we must look at the implications of a particular project for the sectors of industry in which it operates. Lastly, there are obviously special circumstances surrounding investments by the Japanese motor industry, against the background of trade between Japan and the United Kingdom in cars.
As the House knows, it is the policy of this Government, as of previous Governments in recent years, to welcome and actively to promote any inward investment which can improve the United Kingdom industrial base through the introduction of new technology, with new production and management methods, and which is of net overall benefit to the United Kingdom economy. That policy applies on a general basis to Japanese companies, in the same way as to companies from other countries.
Investment by Japanese firms is particularly welcome, both because existing Japanese direct investment is relatively small—with only 25 manufacturing subsidiaries in the United Kingdom—compared with the hundreds of American and European firms which have plants in Britain, and because Japan has something special to offer to our industrial structure in terms of new production technology and an enlightened approach to management. The balance of payments advantages and, of course, the additional employment which such investment brings are very important to us.
The record of Japanese manufacturing investment in this country reinforces my belief that such investment should be encouraged. The Japanese companies established here have provided stable, productive employment for thousands of British workers, have brought benefit to local component manufacturers and their employees through extensive local sourcing of components, and have contributed significantly to our exports. They have in turn benefited from the major advantages of the United Kingdom to the Japanese inward investor: political stability; an essentially sound, oil-supported economy; first-class communications; a wide range of components suppliers; a well-educated and stable work force; reasonable wage rates; and an attractive cultural and social environment, with the language with which they are most familiar after their own.
That is the general position. Before coming on to how it accords with the Nissan project, it might be right to look at the British motor industry, and the component suppliers who form such an important part of it. It is plain for all to see that our motor industry is not what it once was. Since its heyday, the world motor industry has moved on, through decades of technological improvement and years of increasing concern about the social, environmental and energy resource implications of the motor car. The substantial costs of development and manufacture of motor cars has led to rationalisation of model ranges, and the development of integrated, transnational manufacture, exhibited in the latest "world cars". Volume car manufacture has become concentrated in relatively few countries and companies, where substantial economies of scale can be realised, at high levels of efficiency.
For reasons with which the House is familiar, the United Kingdom in the past has often failed to meet this challenge and there is no doubt that it has suffered a severe loss of competitiveness, not only against the rising Japanese industry, but against our European competitors. It is all too easy to cry foul at the products of the Japanese industry, where special factors certainly apply, but there is no escaping the message from the greater productivity of our EC neighbours. We have fallen behind over a long period, and drastic action is needed if we are to remain with a viable motor industry.
This message is, of course, nothing new. Nor is it confined to the motor industry. However, there are encouraging signs that it is being heeded where it matters most, by the manufacturers themselves, both management and workforce. The year 1981 saw substantial gains in productivity across British industry. In the car industry, there are welcome signs that when producing the latest generation of models from up-to-date manufacturing

facilities, United Kingdom assemblers can be up with the performance of other European companies. However, the industry obviously has a fight on its hands.
When looking at the Nissan project, we must also consider the British components industry. The relative decline of the United Kingdom assemblers has naturally affected British component makers, who have faced a halving in the United Kingdom base for their sales over the past 15 years, but they have made considerable efforts to replace this with sales overseas, with notable success. The components industry has proved itself capable of supplying the world's motor manufacturers at competitive prices, with components of high quality. This is clearly an important sector of British industry, and one that deserves our encouragement and support.
In the motor industry, therefore, we have a domestic market that is over half supplied by imports, a car assembly industry which already knows what it has to do to survive in the face of competition, and a components sector that would gladly supply a greater proportion of the home market. Therefore, there seems ample room for a new, efficient United Kingdom car producer. Existing manufacturers should have nothing to fear from this provided that the basic terms are right.
It is against this background that we need to consider the impact of a possible Nissan project on the United Kingdom economy; but there is one more special factor that needs to be taken into account, and that is the arrangements between the United Kingdom and Japanese motor industries governing the import of built-up Japanese cars. For some time now the Society of Motor Manufacturers and Traders has each year discussed the potential impact of Japanese imports on the United Kingdom car industry with its opposite number, the Japanese Automobile Manufacturers' Association. As a result of the understanding developed through these discussions, the Japanese industry has exercised prudence in the level of exports of cars to the United Kingdom. Though these arrangements are the responsibility of the two industries, they are strongly supported by the Government, who recognise the potential difficulties for our motor industry of extreme levels of Japanese car imports.
This is the background to the possibility of Nissan coming to the United Kingdom. In his statement to the House on 29 January last year, my right hon. Friend, now Secretary of State for Employment, said:
The Nissan Motor Company has approached her Majesty's Government to seek their views upon the company's intention, subject to a feasibility study, to establish a substantial car manufacturing operation in the United Kingdom. The Government have given a warm welcome to Nissan's proposal and are prepared in principle to give them their approval and support.
Let me explain why the Government see the possibility of such a project as offering substantial benefits to the United Kingdom. Nissan—whose products are probably better known in the United Kingdom as Datsun—is the second largest motor manufacturer in Japan, and the fifth largest in the world. It is the leading importer from Japan into the United Kingdom. There can be no doubt of its excellence in design, manufacturing, organisation, marketing, and all the skills appropriate to the modern motor industry. Indeed, it is these very strengths which make it, with other Japanese manufacturers, such a formidable competitor for our industry. In the right circumstances, and on the right terms, we believe that these qualities can be as valuable


within the United Kingdom motor industry as they are worrying outside it. It is probably fair to say that those who support the idea of Nissan coming here and those who are doubtful of it, would both agree on the prospect that Nissan would be capable of being a very efficient producer within the United Kingdom. Where they may differ is in their assessment of the effects of such an operation on the rest of the motor industry, and on the United Kingdom economy as a whole.
One cannot sensibly discuss this project, or any other investment project in the motor industry, without looking closely at the question of "local content". This establishes the amount of local components, materials and labour within the finished product, and directly affects the way in which the project influences the United Kingdom economy. One could envisage somebody wanting to set up a car plant in the United Kingdom solely to assemble kits of cars manufactured in Japan. Such an operation—which I emphasise is not proposed by Nissan—would have a very low local content, amounting to very little more than the direct labour involved in assembly. It would provide no opportunities for our component industry, it would displace the products of other United Kingdom manufacturers, with a higher local content, in the domestic market, and it could actively damage the United Kingdom economy, since it would have muh the same effect as an increase in the level of imported cars sold.
Such an operation would certainly not merit any welcome or support from Her Majesty's Government—we would join hon. Members interested in the motor industry in opposing any project of this type—but, as I have heard said, this is not Nissan's proposal. In the statement to which I have already referred, my right hon. Friend said:
It is Nissan's intention to achieve a very high level of local content involving United Kingdom and other EEC suppliers. The local content at the start of production would be 60 per cent. and the company's objective would be to increase this to 80 per cent. as soon as possible after full production is reached."—[Official Report, 29 January 1981; Vol. 997, c. 1079.]
Looking at the way in which a project of this sort could benefit the economy—

Mr. Hal Miller: Full production might not be reached for a number of years in a plant area of that size, and there is already grave concern that the target of 200, 000 cars a year does not justify its own engine line. The danger is that other British manufacturers will be forced to compete on the basis of imported components also, thus doing further damage to our component industry, unless there is some rather clearer timetable than my hon. Friend has given us.

Mr. Wakeham: As I have said, we are in the middle of some difficult and sensitive negotiations and I do not think that my hon. Friend could reasonably expect me at this stage to say any more than I have said. I have listened carefully to the point that he has been making.
Looking at the way in which a project of this sort could benefit the economy, it is helpful to separate two different kinds of effect, which I might characterise as static and dynamic.
The first kind of effect is the direct impact of a new motor manufacturer on the existing market and productive operations in the United Kingdom, and is probably most simply thought of in terms of employment. The new plant will employ a number of people directly on its own operations, and support the employment of more people in its United Kingdom component suppliers. Offsetting this, those of its sales on the United Kingdom domestic market which displace other United Kingdom manufacturers' sales, will tend to displace employment in those manufacturers, and in their component suppliers. Exports from the new plant, and sales at the expense of importers, will, of course, all benefit.
Then we come to what have been called the most dynamic benefits. I referred earlier to the Government's general welcome to inward investment projects which could improve the United Kingdom industrial base—for example, through the introduction of new technology, production and management methods. I think that the phenomenon of the Japanese motor industry over the past decade speaks loudly enough about the possible dynamic benefits that we may gain from having a representative of the Japanese industry manufacturing cars here in the United Kingdom—as we have benefited to date from the operations of American-owned companies.

Mr. Anthony Beaumont-Dark: Will my hon. Friend give way?

Mr. Wakeham: These benefits will come to our other motor manufacturers, although I quite understand their natural hesitation about welcoming a new competitor, and they should certainly extend to our component industry, which can only benefit from the relationships with what will be a critical and sophisticated customer.

Mr. Beaumont-Dark: Will my hon. Friend give way?

Mr. Wakeham: These benefits are of course very difficult to quantify with any confidence. The static effects depend on predictions about sales patterns from various manufacturers in the future, and the dynamic effects are by their nature immeasurable—though none the less real for that.

Mr. Beaumont-Dark: If my hon. Friend will not listen, why should I stay?

Mr. Wakeham: If my hon. Friend will allow me.
The heart of the analysis is clearly whether Nissan will be a genuine European manufacturer of car—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at one minute past Twelve o'clock.